Eliminates the deductibility of federal income taxes paid from state individual and corporate income taxes (OR +$901,000,000 GF RV See Note)
The implementation of HB 456 is expected to have significant ramifications for taxpayers in Louisiana. By removing the ability to deduct federal income taxes from state taxable income, the state will likely see an increase in tax revenue, with estimates suggesting a rise of approximately $901 million in general fund revenue. This change may lead to increased tax burdens for certain taxpayers, particularly those with higher federal tax liabilities. Proponents argue that this will align the state tax system more closely with federal law by simplifying calculations, while opponents may contend it reduces fairness for taxpayers who previously relied on deductions.
House Bill 456 proposes the elimination of the deductibility of federal income taxes paid from the calculation of state individual and corporate income taxes in Louisiana. Specifically, the bill amends and repeals several provisions relevant to how net income is calculated for taxation purposes, effectively increasing the taxable income for both individuals and corporations in the state. The proposed changes come into effect starting January 1, 2020, contingent on the successful adoption of a related constitutional amendment via statewide election.
Sentiment surrounding HB 456 varies significantly among stakeholders. Supporters, particularly fiscal conservatives and those advocating for tax reform, view this bill as a necessary move towards enhancing state revenue and aligning tax policies. They argue that eliminating the deduction will help alleviate the budget constraints faced by the state government. Conversely, opponents, including various advocacy groups and certain taxpayers, express concern over the increased financial burden this would impose, particularly on middle-income families, and argue for maintaining the deductibility as a method of mitigating the tax burden.
Controversy surrounding HB 456 primarily revolves around the broader implications of tax reform in Louisiana. While supporters champion the elimination of the deduction as a step towards a more equitable tax structure, critics worry it may disproportionately affect lower and middle-class taxpayers. Key points of contention include the fairness of taxation, potential impacts on economic activity in the state, and whether the anticipated revenue gains will sufficiently offset the drawbacks of increased taxable income. The discussions highlighted the ongoing debate between budgetary needs and taxpayer protections.