Makes permanent reforms to the credit for individual income taxes paid in other states. (Item #17) (gov sig) (EG +$33,600,000 GF RV See Note)
The impact of SB7 on Louisiana tax law is significant, primarily for residents who may earn income outside the state. By making the tax credit for taxes paid to other states permanent and setting specific limits on this credit, SB7 aims to alleviate tax burdens for individuals who cannot avoid taxation in both their state of residence and other states where they generate income. This could lead to increased compliance and potentially larger revenues for the state by making the tax system more appealing for those working across state lines.
Senate Bill 7, proposed by Senator Morrell during the 2018 Second Extraordinary Session, seeks to make permanent reforms to the individual income tax credit for taxes paid to other states. The bill amends existing tax law by removing the sunset provision that would have limited some tax credits until June 30, 2018, thus ensuring that taxpayers continue to benefit from credits against their Louisiana income tax for taxes paid to other states without an expiration date. This change addresses the ongoing taxation complexities faced by Louisiana residents who earn income in other states.
The sentiment surrounding SB7 appears to be supportive among legislators concerned with the fairness of tax treatment for Louisiana residents, especially those who engage in business or work outside state lines. Proponents believe that ensuring these credits are permanent will enhance economic productivity. However, there may be concerns from financial purists or fiscal conservatives who might view the cost of maintaining these tax credits as a potential long-term liability for state tax revenues.
Notable points of contention around SB7 include the potential long-term fiscal implications of making the tax credits permanent. Critics could express concern over the sustainability of this approach, especially if it limits short-term tax revenue collections by allowing individuals to receive deductions or credits that might reduce state income tax receipts. Additionally, without a clear assessment of how these changes will affect overall taxation equity, dissenting voices may raise alarms about the fairness and potential implications on state budget allocations.