Jindal Tax Plan: Eliminating Income Tax Makes Sense, Raising Sales Tax Doesn’t

Trading One Tax for Another Does Little For La. Economy; Real Answer Is to Cut Government

BATON ROUGE — In his new tax proposal, Gov. Bobby Jindal has recognized the No. 1 thing Louisiana can do to make itself competitive — eliminate the state personal and corporate income taxes.

Texas and Florida are our chief competitors, but really it’s no contest.  People with money will not retire here so long as we have a state personal income tax.  It would be ridiculously expensive.  Similarly, major corporations will never locate their headquarters here or base anything other than production facilities here so long as we have a corporate income tax.  If they did, irate stockholders would probably be able to sue board members personally for malfeasance.  Why would a company locate here and pay an additional 6 percent in income taxes?  Quite simply, they won’t.

Texas and Louisiana have very similar natural resources but there’s one big difference — the money stays in Texas and it flees from Louisiana.  Just look at the skyline of Houston and Dallas.  Then compare it to the skyline of Baton Rouge and Lake Charles, and you’ll see everything you need to see.

Yes, repeal the income tax!

But raise the sales tax to offset it?  No, no, no!  That would be utter folly.  The sales tax is a draconian tax that hits business and individuals very hard, because they pay it even if they’re not making money.

Caution: Don’t buy the ridiculous idea that the sales tax is regressive and falls more heavily on the poor.  That is nonsense.  The basics of life — rent, food, medicine, doctors’ bills, utilities, and public transit AREN’T subject to the state sales tax.  Higher sales won’t effect the poor much at all, but it would affect the middle income working people.

Here’s the answer: 1) Phase-in the repeal of the income tax, and 2) cut state government spending while you are doing it.

Our economy will improve dramatically, raising tax revenues, and we will be eliminating wasteful and unnecessary spending.

Our future will be bright if we eliminate the income tax but not if we raise the sales tax!