Governor's staff defends tax plan - KNOE 8 News; KNOE-TV; KNOE.com |

Governor's staff defends tax plan

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BATON ROUGE, La., (KNOE 8 News) - In defense of the proposed tax shift, the governor's office said, in the following release, that they "...wanted to provide some facts and figures to keep in mind":

1. Sales tax is a MORE STABLE form of revenue compared to the personal income tax. According to the Louisiana Revenue Estimating Conference (REC) and the Louisiana Department of Revenue (LDR), sales tax collections have historically been MORE STABLE than personal income tax collections. (REC Historical Data; LDR Annual Reports). Additionally, according to R. Alison Felix, who authored "The Growth and Volatility of State Tax Revenue Sources in the Tenth District," state sales taxes have proven to be a more stable source of revenue for year-to-year budgetary expenditures."

2. Over a 30-year period, the nonpartisan Tax Foundation used 26 different economic studies to determine sales taxes were MORE BENEFICIAL for economic growth than both personal and corporate income tax. (Tax Foundation Special Report No. 207 December 18, 2012)

3. Eliminating personal income tax will create a business climate that encourages MORE BUSINESS INVESTMENT and MORE JOBS. According to the nonpartisan Tax Policy Center, America's economy would steadily grow by "0.6 percent larger than otherwise after two years; 1.8 percent larger after ten years; and 3.6 percent larger in the very long run" if the nation switched to a tax system that relied on sales tax, not income tax. (Tax Policy Center)

4. Sales tax grows with the economy. When compared to other sources of revenue, sales tax is relatively stable during economic downturns resulting in more revenue as the need arises.

5. Governor Jindal's proposal will KEEP the Constitutional protections for the exemptions of food for home consumption, prescription medicine, and residential utilities. These exemptions result in the average individual or family with income under $30,000 per year having almost half of their annual purchases exempt from state sales tax. These progressive provisions lessen the impact of the sales tax on lower income individuals and families.

6. In order to offset unfair impacts to low income groups, Governor Jindal's proposal will set aside funding to operate an Earned Income Tax Credit or a similar mechanism.

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