Phases out the corporation franchise tax (Item #28) (OR DECREASE GF RV See Note)
Impact
The elimination of the corporation franchise tax is anticipated to have significant implications for state revenue and local economies. Proponents of the bill argue that removing this tax will boost business investment and employment opportunities, essentially fostering a climate conducive to economic development. Conversely, there are concerns regarding potential revenue losses for the state, which relies on these taxes for funding public services. The bill's gradual approach aims to mitigate sudden fiscal shocks that could arise from a complete tax elimination, thereby aiming for a balanced transition.
Summary
House Bill 90 proposes the phased elimination of the corporation franchise tax in Louisiana over a period of three years. The bill aims to diminish the financial burdens on both domestic and foreign corporations operating within the state, thereby creating a more favorable business environment. The current structure imposes a tax based on the taxable capital of the corporations, with rates varying based on the amount of capital a corporation holds. By reducing this tax gradually until its complete phase-out in 2020, advocates believe it will stimulate economic growth by encouraging corporations to invest and expand their operations in Louisiana.
Sentiment
The sentiment surrounding HB90 appears to be largely positive among business groups and advocates of economic reform. Supporters view the reduction of the corporate tax as a necessary measure to enhance Louisiana's competitiveness in attracting businesses and fostering job creation. However, there is a level of skepticism among fiscal conservatives and public service advocates who warn that such tax cuts may lead to deficits and underfunding of essential services. This duality in opinion reflects the common tension between fostering economic growth and ensuring adequate state funding for public needs.
Contention
One notable point of contention surrounding HB90 relates to the balance between economic growth and state funding. Critics of the bill raise valid concerns regarding the long-term impact on the state budget, questioning whether the anticipated economic benefits will sufficiently offset the losses in tax revenue. Additionally, there is debate over how such cuts could disproportionately affect public services, potentially affecting Medicaid or education funding. As legislators weigh these factors, the discussions surrounding HB90 underscore the complexities involved in tax reform and economic policy-making.
Phases-out the corporation income and franchise taxes and reduces the amount of exemptions, deductions, and credits that may be claimed to reduce corporate income and franchise tax liability (OR DECREASE GF RV See Note)