Increases the amount of the earned income tax credit (Item #26)
The impact of HB 97 on state laws involves an amendment to R.S. 47:297.8, which outlines the state's earned income tax credit structure. By increasing the credit, the state is directly affecting its tax structure and revenue, which may lead to reduced tax liabilities for qualifying individuals. In the broader economic context, this increase could stimulate local economies as low-income families are more likely to spend additional funds on necessary goods and services, promoting community growth and stability.
House Bill 97 proposes to increase the Louisiana earned income tax credit from 3.5% to 5% of the federal earned income tax credit. This change aims to provide more financial relief to low-income individuals and families in the state by expanding the benefits they receive through state income tax credits. The bill is applicable for taxable years starting January 1, 2016, reflecting a targeted approach to assist those who are working but earning lower incomes, thereby incentivizing employment and reducing poverty levels in Louisiana.
The sentiment around HB 97 tends to be positive among supporters who see it as a meaningful step towards alleviating economic hardship for low-income families. Advocates argue that enhancing the earned income tax credit will empower individuals to become more financially independent. However, there are concerns from some fiscal conservatives about the impact of such tax cuts on state revenues, leading to debates about the sustainability of increased credits given the state’s budgetary constraints.
Some notable points of contention include the potential implications for state funding and budget priorities. Critics argue that while the bill aims to support low-income families, it also raises questions about the long-term viability of funding such tax credit increases without offsetting revenue sources. There are worries that without a thorough financial examination, the bill could contribute to budget shortfalls impacting essential services and programs that rely on state funding.