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One State, Two States

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Ear to the Ground

Gov. Jindal’s New Tax Scheme Would Punish the Poor

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Posted on Jan 11, 2013
Derek Bridges (CC BY 2.0)

Louisiana Gov. Bobby Jindal is looking to shift a large part of the tax burden in his state off corporations and the wealthy and onto the public by eliminating personal and corporate income taxes and raising the sales tax.

While much of the United States remains in a revenue crisis, Jindal has said his plan—which has yet to be revealed in full—would be revenue-neutral, and that his goal is to keep sales taxes “as low and flat as possible.” But according to an article in The Monroe News-Star, eliminating the state income tax could require an increase in state sales tax from 4 percent to 7 percent.

Critics of plans that extract revenue from sales rather than personal and corporate income point out that such schemes discriminate against lower-level earners. This occurs because all consumers who purchase goods and services are charged at the same rate, regardless of income.

Income taxes, on the other hand, are levied at graduated rates, which take into account the smaller purchasing power of low- to middle-income earners. This leaves the less well-off with more money to spread throughout their personal budget. Generally applied flat taxes such as the sales tax disproportionately affect such earners and leave the rich to keep more of their money.

Jindal does not appear to acknowledge this.

—Posted by Alexander Reed Kelly.

The Times-Picayune at NOLA.com:

“We are meeting with every legislator over the coming weeks to discuss the details of the tax reform plan [said the governor’s statement on the overhaul plan]. Our goal is to eliminate all personal income tax and all corporate income tax in a revenue neutral manner. We want to keep the sales tax as low and flat as possible.

“Eliminating personal income taxes will put more money back into the pockets of Louisiana families and will change a complex tax code into a more simple system that will make Louisiana more attractive to companies who want to invest here and create jobs.

“Tax reform will remove administrative burdens from families and small businesses and improve Louisiana’s business prospects; create more business investment opportunities with increased job growth; and raise the state’s profile in national business rankings.

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