Louisiana: Six Reasons for Tax Reform
- Mar 17, 2013 | Gail Cole
Governor Bobby Jindal (R) of Louisiana presented details for his administration's tax reform proposal to a joint meeting of the House Ways & Means Committee. The plan was first introduced back in January, though details were not available at that time. It's a revenue neutral plan-- revenue lost by eliminating the income tax would be gained by elsewhere.
The governor stressed six benefits to his plan:
- No income tax means more control: "Taxing what people spend instead of what they earn gives taxpayers more control over their own money;"
- With no income tax, Louisiana is the best place to start a business:
- Everyone pays a fair share;
- It removes power from special interest groups;
- It keeps sales tax exemptions for food, prescription drugs, and utilities; and
- A broad state sales tax base means more revenue stability.
- Revenue neutrality would be achieved by:
- Increasing the state sales tax to 5.88% from 4%;
- Expanding the sales tax to cover many services;
- Eliminating over 200 exemptions;
- Eliminating approximately $2.7 billion in personal and corporate income and franchise tax;
- Implementing targeted tax offsets, such as raising the tax on cigarettes and tobacco products; and
- Maintaining "vital tax offsets and business competitiveness incentives."
Remote Sales Tax
The plan also creates a uniform sales tax base for all remote sellers (vendors without a brick-and-mortar presence in Louisiana), and establishes a "Louisiana Sales Tax Commission to act as collector, auditor, interpreter, and rule-maker around state and local sales tax." It's goal would be to "reduce the burden of sales tax administration on business." Currently, Louisiana does not have a "unified local and state sales tax collection process… ."
It's a bold plan, and one that is sure to see opposition. Accorging to C.B. Forgotston, a political commentator who has often criticized the governor, "the plan 'will not even get out of the House of Representatives' because of the taxes it would raise… ."
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