Louisiana Governor Bobby Jindal's tax swap reform plan is opening to mixed reviews in Louisiana but not in conservative quarters outside of the state.
Some of the strongest conservative voices are praising the general proposals in the strongest of terms.
Here is a sample of the discussion that is being held in Louisiana and from outside.
With dueling budgets being introduced on Capitol Hill this week, the possibility of tax reform is the talk of Washington. As we predicted before last November’s elections, tax reform will be on the agenda in 2013 – but has its best chances in the states. We are seeing that demonstrated Thursday by Louisiana’s Republican governor, Bobby Jindal.
Jindal unveiled what could be, if approved by the legislature, the boldest, most pro-growth state tax reform in U.S. history. His plan, outlined in Baton Rouge this morning during a joint meeting of the House Ways and Means Committee and the Senate Revenue and Fiscal Affairs Committee, calls for the elimination of all state personal and corporate income taxes, as well as the state franchise tax on capital stock. This would be replaced by an increase in the state sales tax rate to 5.88 percent, up from 4 percent. The sales tax would also apply to a broader base of goods and a number of services previously untaxed.
by Grover Norquist
http://blogs.reuters.com/great-debate/2013/03/14/jindals-model-for-tax-reform/
Perhaps so, but it takes a whopper of a sales tax to replace the income tax (and Louisiana's income tax is lower than Oregon's, as is its overall tax burden).
The Louisiana sales tax (local jurisdictions add in their own levies) would be raised from 4 percent to 5.88 percent under Jindal's plan and cover a wide range of services as well as goods.
Jindal says he would keep the exemptions for food for home consumption, prescription drugs and utilities to help protect the poor. But imagine what it would be like to pay a sales tax when you go to an attorney -- or, perhaps more to the point, when you pay a tax preparer for your federal return?
Reuters says the plan is expected to run into trouble in the Louisiana Legislature because of the hefty sales-tax increase. One concern is that it would hurt tourism, which is a big deal in the state.
http://www.oregonlive.com/mapes/index.ssf/2013/03/dont_try_this_in_oregon_louisi.html
Governor Bobby Jindal's proposed tax reform plan will eliminate personal and business income taxes in favor of higher sales taxes. It's a move that Charlie Hinchee, the owner of a local art gallery in downtown Lake Charles, says would kill small businesses.
"I think it will kill off small business," Hinchee said. "I mean, it's not going to affect Wal-Mart or Kmart or any of the large retailers that are out there."
That's because, according to Hinchee, the profit margin for a small business is about 1.5 percent; much smaller than that of a larger or chain business. Hinchee said any loss to that would be detrimental to small businesses like his.
"Large businesses have many profit centers that they can go on and small businesses don't have that," said Hinchee. "I mean, I've got two."
Still, Hinchee believes the proposed plan doesn't address the main issue plaguing state government.
"It doesn't address the real problem which is the budget shortfalls which we keep having year out," he said.
http://www.kplctv.com/story/21646860/jindal-tax-plans-affect-on-small-businesses
Two months ago exactly, I appeared on TV to talk about the concept of eliminating the personal and corporate income tax in Louisiana.
Now Governor Jindal has unveiled a specific proposal.
The plan will eliminate two major tax types: personal income tax and corporate income and franchise tax. Eliminating income taxes in a revenue-neutral manner and improving sales tax administration will dramatically simplify Louisiana’s tax system and reduce administrative problems for families and small businesses. The effective start date of the program is January 1, 2014. …The plan will ensure revenue neutrality by…[b]roadening the state sales tax base and raising the state rate to 5.88%.
This is a superb plan.
Of all the possible ways for a state to generate revenue, the income tax is the most destructive.
My new man crush
Despite a strongly Republican legislature in Louisiana, Jindal’s plan faces skepticism in some quarters.
The plan “will not even get out of the House of Representatives” because of the taxes it would raise, said C.B. Forgotston, a lawyer, political commentator and former legislative aide in Louisiana.
The plan would need Democratic support to become law, and Forgotston said that is unlikely because the bill does not increase overall revenue for the state.
Jindal’s plan would extend the sales tax to some services, but it is expected to exempt a wide range of them, including health care, legal, construction, oil and gas services, education and possibly others.
The plan was presented to a joint state legislative committee. Jindal first floated the idea of swapping the income tax for a sales-tax increase in January.
Many local governments impose fairly high sales taxes, and adding more to the state levy could be troublesome in a state that relies on spending by tourists for much of its revenue.
The Louisiana legislature will take up the plan in its session starting on April 8.
http://www.dispatch.com/content/stories/national_world/2013/03/15/louisianas-gov--jindal-looks-to-end-income-tax.html
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