Gov. Bobby Jindal is proposing to eliminate Louisiana’s income and corporate taxes and pay for those cuts with increased sales taxes, the governor’s office confirmed Thursday. The governor’s office has not yet provided the details of the plan.
“The bottom line is that for too long, Louisiana’s workers and small businesses have suffered from having a state tax structure that is too complex and that holds back economic prosperity,” Jindal said in a statement released by his office. “It’s time to change that so people can keep more of their own money and foster an environment where businesses want to invest and create good-paying jobs.”
Jindal says he’s meeting with legislators now, with the goal of revenue neutral tax reform. Some reports claim the state’s 4-percent income tax might have to rise to 7 percent to make up the difference, but the governor’s office hasn’t gotten that deep into details as it discusses possibilities:
Gov. Bobby Jindal’s tax reform package could raise the state’s sales tax to as much as 7 percent so the state’s corporate and personal income taxes could be eliminated.
Jindal met with key legislative leaders and cabinet members at the Governor’s Mansion Wednesday to discuss possible proposals that would allow the elimination of income taxes. Each scenario discussed would raise sales taxes to some degree, depending onhow many tax exemptions and exclusions could be eliminated.
The Tax Foundation gives the edge in state tax competitiveness to any U.S. states who do without one of the three major taxes— personal income, corporate, or sales. Tax simplification along these lines would likely vault Louisiana from a rank of 32nd into the top half of the top 10.
Wyoming, Nevada, and South Dakota have no corporate or individual income tax; Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire and Montana have no sales tax.
It’ll be interesting to watch this plan progress. In contrast with President Obama, Jindal has often shown himself to be a chief executive with an understanding of how laying groundwork and cajoling support are part of advancing one’s agenda. He does his share of speech-giving, but he doesn’t assume his mere declaration magically makes legislation appear and pass. Jindal showed his desire to be an intellectual and enthusiastic leader for the right in the immediate aftermath of Obama’s win. This fight can serve as a model of his ability to be an on-the-ground policy leader as well. Good luck to him, to the people of Louisiana, and the businesses that go there to flourish.