Louisiana House Bill HB85

Louisiana 2016 1st Special Session

• Introduced: 2/18/16
• Refer: 2/18/16

Caption

Provides relative to the allowable amount of net operating loss deduction (Item #12) (OR SEE FISC NOTE GF RV See Note)

Impact

The introduction of HB 85 has implications for both state revenue and corporate financial strategies. With a reduced deduction allowance, the state aims to increase its tax base by limiting the benefits corporations can declare from their losses. This could potentially enhance state revenue during economic downturns, as it restricts the financial relief available to businesses, possibly leading to a stricter corporate tax regime. Conversely, it may discourage some businesses from operating in the state, as the tax burden could become more pronounced in the event of financial losses.

Summary

House Bill 85 proposes amendments to the existing statutes regarding the allowable amount of net operating loss deductions for corporate income tax in Louisiana. The bill aims to reduce the previous deduction allowance from 72% to 50% of the net operating loss incurred, while still ensuring that the deduction does not exceed 72% of the corporation's net income. This legislative change is positioned to impact corporate entities within the state, altering the financial landscape for businesses that have experienced losses and are looking to recuperate through tax benefits.

Sentiment

The sentiment surrounding HB 85 appears mixed. Proponents believe that the alterations will help stabilize state finances and provide a fairer tax environment by preventing large corporations from excessively minimizing their tax liabilities through substantial loss deductions. On the other hand, critics of the bill argue that reducing the allowance for net operating loss deductions may place undue stress on struggling businesses, making recovery more difficult and potentially leading to job losses.

Contention

Notable points of contention among legislators stem from concerns about the economic impacts on businesses facing difficulties. While some see this move as a necessary corrective to encourage fiscal responsibility within corporations, others highlight potential harm to local economies where businesses may struggle under increased tax burdens. The debate encapsulates broader themes of fiscal policy, business regulation, and the balance of interests between maintaining state revenue and supporting economic growth.