Provides for the calculation of taxable individual income (OR +$398,000,000 GF RV See Note)
Impact
The implications of HB 462 could be significant, as it might lead to an increase in taxable income for many individuals due to the inability to reduce their tax burden with federal deductions. This amendment could potentially result in increased revenue for the state, as suggested by estimates indicating a gain of approximately $398 million to the General Fund. The adjustment aims to create a more straightforward and consistent tax calculation process within the state, which is intended to simplify the tax filing experience for residents.
Summary
House Bill 462 aims to amend the calculation of taxable individual income for Louisiana residents by removing the allowance for individual deductions based on federal income taxes. This change signifies a shift in how taxpayers determine their taxable income, as it becomes independent of the deductions that may apply on the federal level. The bill outlines that the computation will strictly adhere to the income realized in the taxpayer's taxable year, irrespective of any federal adjustments, and is set to take effect from January 1, 2018.
Sentiment
The sentiment surrounding the bill appears to be mixed. Supporters argue that eliminating the federal deduction simplifies the tax code and ensures that Louisiana’s tax system is straightforward and predictable. However, opposition typically stems from concerns about the potential financial burden this could impose on taxpayers, particularly those who have previously relied on federal deductions to alleviate their tax responsibilities. Advocacy groups and taxpayers alike have expressed apprehension regarding this shift and its potential impact on personal finances.
Contention
Notable points of contention include the debate over the fairness and equity of removing federal deductions from state tax calculations. Critics are particularly worried that this change could disproportionately affect lower and middle-income individuals who may depend more heavily on these deductions. The discussion highlights larger themes in tax policy regarding whether to prioritize state revenue generation over taxpayer relief, and the balance between simplifying tax administration and maintaining taxpayer rights.
Provides for a flat tax rate for purposes of calculating individual income tax, increases the amount of the earned income tax credit, and modifies other income tax credits and deductions (RE +$5,000,000 GF RV See Note)
Repeals the state income tax deduction for federal income taxes paid for purposes of calculating individual and corporate income taxes (Item #17) (OR +$374,000,000 GF RV See Note)
Repeals the state income tax deduction for federal income taxes paid for purposes of calculating individual and corporate income taxes (Item #40) (EG SEE FISC NOTE GF RV See Note)
(Constitutional Amendment) Provides relative to the rates and brackets for purposes of calculating individual income tax and repeals the deduction for federal income taxes paid for purposes of calculating individual and corporate income tax (OR SEE FISC NOTE See Note)