Louisiana House Bill HB546

Louisiana 2021 Regular Session

• Introduced: 4/2/21
• Refer: 4/2/21
• Refer: 4/12/21

Caption

Reduces the rates and brackets for purposes of calculating individual income tax liability and the tax liability for estates and trusts and modifies certain income tax credits, exemptions, and deductions (OR +$172,000,000 GF RV See Note)

Impact

The modifications introduced by HB 546 are expected to have a wide-ranging impact on state revenues and taxpayers alike. The proposed reduction in tax rates for individuals and adjustments in deductions is set to take effect for tax years beginning on or after January 1, 2023. This could result in a substantial fiscal shift, with proponents suggesting that the changes would stimulate consumer spending by increasing disposable income, while critics raise concerns over potential revenue shortfalls for state-funded programs that rely on tax income.

Summary

House Bill 546 proposes significant changes to Louisiana's income tax structure by reducing the rates and brackets for calculating income tax liability for individuals, estates, and trusts. The bill aims to benefit taxpayers by eliminating taxes on the first $12,500 of income and adjusting the marginal tax rates to simplify the tax obligations for filers. Additionally, it increases the personal exemption amounts, which could lead to a larger tax refund or reduction in tax liability for many residents.

Sentiment

The sentiment surrounding HB 546 appears to be mixed. Supporters argue that the reforms will alleviate the tax burden on individuals and stimulate economic activity within the state. Conversely, detractors caution against the financial implications for state services and infrastructure, questioning whether the tax cuts will undermine funding for essential public services. This tension reflects broader debates on how best to balance tax relief with maintaining adequate funding for government functions.

Contention

Notable points of contention within the discussions around the bill revolve around its elimination of certain tax credits and deductions, including the deduction for federal income taxes paid and several tax credits for child care expenses and historic rehabilitation. Critics worry that repeals could negatively affect vulnerable demographics, such as families and individuals who depend on tax relief mechanisms, while advocates maintain that the overall tax structure will be more beneficial in the long run.