Louisiana House Bill HB422

Louisiana 2017 Regular Session

• Introduced: 3/31/17
• Refer: 3/31/17
• Refer: 4/10/17

Caption

Eliminates the deductibility of federal income taxes paid from state individual and corporate income taxes

Impact

The impact of HB 422 on state laws would be considerable, as it seeks to change the framework through which state income taxes are calculated. This change could lead to an increase in state revenue due to the broader tax base without the federal tax deduction. However, it might also place a heavier tax burden on individuals and businesses who previously benefited from this deduction. The implications of such changes collectively call into question the balance of taxation and fiscal responsibility within the state.

Summary

House Bill 422 aims to eliminate the deductibility of federal income taxes from state individual and corporate income taxes in Louisiana. Under current law, residents and corporations could deduct their federal taxes when calculating their state income tax obligations. The proposed change would repeal this provision, impacting both individual taxpayers and corporate entities, and could significantly alter the tax liability of these groups. The bill is set to take effect on January 1, 2018, contingent upon the successful adoption of a related constitutional amendment.

Sentiment

Sentiment surrounding HB 422 is likely to be polarized. Advocates may argue that removing the federal tax deduction aligns state taxation more closely with state revenues and can simplify the tax code, while opponents might contend that it unfairly penalizes taxpayers who already bear significant federal tax burdens. Supporters of the bill could view it as a necessary reform to improve state fiscal health, whereas detractors may express concern about the negative financial impact it imposes on individuals and businesses.

Contention

The contention surrounding HB 422 primarily revolves around the implications of repealing federal tax deductibility. Critics argue it would disproportionately affect lower and middle-income taxpayers, potentially leading to increased financial strain. They emphasize that as federal taxes rise, this measure could exacerbate the financial burden on these groups. Proponents may counter that the bill is essential for ensuring a healthier state budget and argue that tax reform should reflect the realities of state finances in a growing economy.