Louisiana Senate Bill SB10

Louisiana 2018 2nd Special Session

• Introduced: 5/22/18
• Refer: 5/22/18
• Report Pass: 5/29/18
• Engrossed: 5/31/18

Caption

Increases the earned income tax credit. (Item #21)(See Act) (RE -$21,000,000 GF RV See Note)

Impact

The bill is set to impact state tax laws, particularly the legislation surrounding individual income tax credits for low-income earners. By increasing the EITC, SB 10 is anticipated to impact the financial situations of many households across Louisiana positively. Given that the EITC is often credited with reducing poverty and incentivizing employment, its enhancement through this bill may lead to improved economic conditions for the qualifying population. However, the bill ties the credit's applicability to the expiration of temporary sales taxes enacted in the wake of other legislative measures, creating a conditional framework for tax relief that could be subject to changes in fiscal policy.

Summary

Senate Bill 10, introduced by Senator Morrell, aims to increase the earned income tax credit (EITC) available to individuals in Louisiana. The bill proposes raising the credit from 3.5% to 5% of the federal earned income tax credit an individual qualifies for. This increase reflects an effort to provide greater financial assistance to low-income families, potentially alleviating some of their tax burdens and encouraging work among individuals in lower income brackets. By making this adjustment, the bill seeks to align Louisiana's support for working families with the federal standard while enhancing the state's commitment to economic growth and stability for its citizens.

Sentiment

The general sentiment around SB 10 appears to be positive among advocates of low-income support and tax relief. Supporters view this increase in the earned income tax credit as a necessary measure to support working families and promote economic stability. However, there may be concerns articulated by fiscal conservatives who might argue that increasing tax credits could lead to higher pressures on the state budget, particularly in the context of the termination clause linked to temporary sales taxes. This juxtaposition highlights a broader debate regarding how best to balance budgetary constraints with the need to provide essential support for vulnerable populations.

Contention

While SB 10 enjoys considerable support, key points of contention may arise around its fiscal implications and future sustainability. Some legislators and stakeholders might question the state's capability to absorb the increased cost associated with raising the EITC, particularly amid fluctuating revenues and the impact of temporary taxes. Moreover, discussions may also focus on how this credit aligns with broader fiscal strategies in Louisiana, including whether such tax relief measures adequately address the systemic economic challenges faced by the state's low-income residents, as opposed to more comprehensive reforms that tackle root causes of poverty.