Corporate Tax

The legislator passes Three tax assessments with earnings tax and company tax deductions

BATON ROUGE, La. (LSU Manship School News Wire) – Legislators passed three tax laws on the last day of Thursday’s session that include income tax and corporate tax deductions, including one that lowers income tax brackets.

The tax reform will allow individual taxpayers and businesses to lower their income tax rates while giving up the right to deduct federal tax payments from their state tax returns.

Legislators supporting the bills believe that the so-called “tax swap” would simplify the tax law without significantly changing taxpayers’ balance sheets. Republican leaders expect the state to bring in roughly the same amount of taxpayers’ money if the new laws are implemented, while other analysts suggest short-term lost revenue.

The bills, which were a high priority for Republican leaders, were finalized just hours before the Senate legislature closed. You will now move to Governor John Bel Edwards’ desk.

If he approves them, they will be presented to state voters in October.

The three bills followed four other bills previously passed by lawmakers in a sweeping effort proposed by Republican leaders to make the state more attractive to business and investment.

The bills were not without opposition, and Senator Karen Carter Peterson D-New Orleans spoke out against one of the bills, SB159 by Senator Bret Allain, R-Franklin, which lowered the maximum allowable income tax rate from 6 percent to 4.75 percent.

“The problem I have with the law is that it gets put into the constitution,” Peterson said. “That is appropriate for the law, but not for constitutional law. Anytime we ever want to touch the income tax rate again, we have to go back, pass it in legislature, and pass it again with the people. I think this is a bad political decision for the state. “

Allain led much of the tax reform and defended the last passage of SB159 in response to Peterson’s dissent.

“To be clear, we are setting an upper limit and have given ourselves some headroom,” said Allain. “The public has the assurance that prices will not exceed a certain amount. I think it’s reasonable. It was asked for. “

Following comments from Peterson and Allain, the bill was passed in Senate 34-3.

One of the bills, HB278, by Rep. Stuart J. Bishop, R-Lafayette, lowered the income tax rate for each tax bracket. The bottom range rose from 2 to 1.85 percent for the first $ 12,500 of net income, the middle range from 4 to 3.5 percent for the next $ 37,500 of net income, and the top range from 6 to 4.25 percent Percent for incomes over $ 50,000. The bill was passed in the Senate with 36 to 1 votes.

For businesses, HB292 of Rep. Neil Riser, R-Columbia changed the corporate tax rates and the number of tax rates at which those rates apply, while removing federal corporate tax deductions.

According to the bill, companies would now file under one of three brackets instead of under five. The new tax rates are now 3.5 percent on the first $ 50,000 of corporate profits, 5.5 percent on profits over $ 50,000 and up to $ 150,000, and 7.5 percent on profits over $ 150,000, while the old tax rates were set at 4, 5, 6, 7 and 8 percent in five tax brackets. The bill was passed with 36: 0 votes.

Legislators have said that abolishing federal tax deductions would give the state more stability in tax collection that would no longer fluctuate with changes in federal tax rates.

Louisiana citizens will have the option to incorporate these bills into the Constitution on October 9, unless Edwards vetoed. He said he was willing to consider them as long as they did not result in large revenues being stolen from the state.

Click here to report a typo.

Copyright 2021 LSU Manship School News Wire. All rights reserved.

Related Articles