The Louisiana House endorsed a pair of bills Monday that would cut tax rates for some corporations while eliminating a major corporate tax break for paying federal income taxes.
The tax swap is part of a broader effort to simplify and streamline the state’s tax structure and would decouple state tax policy from the federal government’s, though some lawmakers say they are concerned about raising taxes on smaller companies, The Center Square reports.
HB292 by Rep. Neil Riser, R-Columbia, calls for repealing the corporate tax break for federal income taxes paid. The deduction is enshrined in the state constitution, which means at least two-thirds of the legislators in each chamber and a majority of voters would have to approve the change. HB75, which contains the amendment, is awaiting a hearing in the House’s Civil Law Committee.
The Legislative Fiscal Office estimates that eliminating the deduction would generate more than $276 million for state finances over five years. Killing the tax break is a key part of a larger movement this year to broaden the state’s tax base and lower tax rates. Members approved HB292 by a 75-22 vote.
Riser’s HB293 calls for a “flat” corporate income tax, replacing the current five tax brackets ranging from 4% to 8% for different amounts of income with a single rate. The bill originally proposed a 6% rate; lawmakers amended it Monday to call for a 6.5% rate in hopes of achieving a tax swap that comes closer to bringing in the same amount of revenue.
The tax swap would cost state finances more than $365 million over five years, according to a Fiscal Office estimate based on the 6% rate. The office has not yet created a fiscal note for the 6.5% rate. Read the full story.