HB352 By Representative Garrett RFD Ways and Means Education Rd 1 27-FEB-20

SYNOPSIS: Under existing law, corporate taxpayers are allowed to deduct federal income taxes paid or accrued within the year. Corporate taxpayer income is taxed at a rate of six and one-half percent.

This bill would propose an amendment to Amendment 212 of the Constitution of Alabama of 1901, as amended by Amendment 662 of the Constitution of Alabama of 1901, now appearing as Section 211.03 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, to provide that the income tax rate for corporations shall be four and three-quarters percent unless reduced by the Legislature. This amendment would also eliminate the federal income tax deduction for corporate taxpayers.

A BILL TO BE ENTITLED AN ACT

Proposing an amendment to the Constitution of Alabama of 1901, as amended; to amend Amendment 212 to the Constitution of Alabama of 1901, as amended by Amendment 662 to the Constitution of Alabama of 1901, now appearing as Section 211.03 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, to provide that the income tax rate for corporations shall be four and three-quarters percent, unless reduced by the Legislature, and to repeal the federal income tax deduction for corporate taxpayers.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:Section 1. The following amendment to the Constitution of Alabama of 1901, as amended, is proposed and shall become valid as a part thereof when approved by a majority of the qualified electors voting thereon and in accordance with Sections 284, 285, and 287 of the Constitution of Alabama of 1901, as amended:

PROPOSED AMENDMENT

(a) This amendment shall be known and may be cited as, "The Alabama Business Tax Competitiveness Act."

(b) Amendment 212 to the Constitution of Alabama of 1901, as amended by Amendment 662 to the Constitution of Alabama of 1901, now appearing as Section 211.03 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, is amended to read as follows:

"Amendment No. 212

"The legislature Legislature shall have power to levy and provide for the collection of taxes for state purposes on taxable income of corporations, from whatever source derived, for the calendar year 1963, or for any fiscal year beginning in the calendar year 1963, and each year thereafter, at a rate not exceeding five percent. However, the rate shall be not exceed six and one-half percent on taxable income of corporations for the calendar year 2001, or for any fiscal year beginning in the calendar year 2001, and each year thereafter until calendar year 2020, or any fiscal year beginning in the calendar year 2020. However, the rate shall be four and three-quarters percent on taxable income of corporations for calendar year 2021, or for any fiscal year beginning in the calendar year 2021, and for any year thereafter unless otherwise reduced by an act of the Legislature. All federal income taxes paid or accrued within the taxable year by corporations shall always be deductible in computing income taxable under the income tax laws of this state, provided that in the case of foreign corporations the amount of federal income tax deductible shall be in proportion to income derived from sources within Alabama, to be determined in accordance with such laws as the legislature may enact. The increase in the corporate income tax rate to six and one-half percent provided by this amendment shall be self-executing and shall require no enabling legislation."

Section 2. An election upon the proposed amendment shall be held in accordance with Sections 284 and 285 of the Constitution of Alabama of 1901, now appearing as Sections 284 and 285 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, and the election laws of this state.

Section 3. The appropriate election official shall assign a ballot number for the proposed constitutional amendment on the election ballot and shall set forth the following description of the substance or subject matter of the proposed constitutional amendment:

"Proposing an amendment to the Constitution of Alabama of 1901; to amend Amendment 212 to the Constitution of Alabama of 1901, as amended by Amendment 662 to the Constitution of Alabama of 1901, now appearing as Section 211.03 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, which would repeal the federal income tax deduction for corporations and provide that the income tax rate for corporations shall be four and three-quarters percent, unless otherwise reduced by an act of the Legislature.

"Proposed by Act ________."

This description shall be followed by the following language: