Governor begins a state-wide swing to defend his tax plan - KNOE 8 News; KNOE-TV; KNOE.com |

Governor begins a state-wide swing to defend his tax plan

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HOUMA, La., (KNOE 8 News) – Governor Bobby Jindal launched a statewide tour today to make the case for his plan to eliminate income taxes, abolish over 200 special interest tax loopholes and make Louisiana's tax code simpler and fairer for Louisiana families and businesses.

Governor Jindal stressed that while Louisiana's economy is outperforming the southern and national economies, there are too many Louisianians who are unemployed, underemployed or that have left the state to find work. The Governor said that a major obstacle to helping more Louisianians find work and growing the economy is Louisiana's tax code, which he called complex, unstable and unfair. In his address, he blasted the current tax system for enabling special interest groups to rig the system.

Governor Jindal said, "Over the past five years, we've reformed out ethics laws, revamped the state's workforce development system, eliminated onerous business taxes and passed landmark education reforms. Every challenge we have taken on has been about making Louisiana the best place in the world to find a job and raise a family.

"Our work is starting to pay off. We're now at the top of many rankings for the best business climates in the country and we are competing for and winning major economic development projects. We are one of only six states that have more jobs now than at the beginning of the recession.

"But – there are still many Louisianians looking for work. There are still too many Louisianians that want to find better-paying jobs. And there are still too many Louisianians living in other states because they couldn't find work here. That's unacceptable. I ran for Governor to make sure that all of our sons and daughters could pursue their dreams here at home. We have made progress on that front, but our work is far from over.

"One of the biggest obstacles we face in helping more Louisianians find work and growing our economy is Louisiana's tax code. Our current tax code is complex, unstable and unfair. To bring more job opportunities to Louisiana, we must start by having a tax structure that looks like it was designed on purpose.

"As it stands today, we have over 460 loopholes on the books that make our system complex, volatile and unfair. That's why I want to overhaul our tax code by eliminating income taxes and getting rid of loopholes that allow powerful special interests to game the system.

The Governor added, "Under the current system, if you have a lobbyist and lawyer, you have a loophole. Let me put that a different way. In 2011, we actually went in the hole on corporate income tax by some $76 million.

"In other words, we actually paid companies through loopholes to not pay corporate income tax. Think about that – we sent more taxpayer dollars to corporations than they paid in income taxes to the state. That goes to show you our tax system is unfair and riddled with loopholes and exemptions. That's why along with eliminating income taxes, we're going to eliminate over 200 loopholes.

"Powerful special interest groups will no longer be able to rig the system. That means everyone will pay their fair share, but no more than that."

Governor Jindal said eliminating income taxes and loopholes would have six benefits, including:

1. Eliminating income taxes will give more control to the taxpayer. Taxing what people spend instead of what they earn gives taxpayers more control over their own money.

2. Eliminating income taxes will help make Louisiana the best place to start a business.

3. By overhauling the tax code, eliminating income taxes and loopholes, everyone will pay their fair share, but no more than that.

4. Loopholes will be closed so close powerful special interest groups will no longer be able to rig the system.

5. Food, prescription drugs and utilities will be protected from increased state sales taxes.

6. Switching to a sales tax base will bring more stability in funding for government services.

The Governor also took on critics of his tax reform proposal – who he said were defending the current system that allows special interests to rig the system. Governor Jindal debunked the following five myths that opponents have spread:

Myth #1 – Governor Jindal's plan will raise taxes on low-income and middle-class Louisianians.

Fact: Eliminating income taxes and closing loopholes will reduce the tax burden for individuals and families across every income level.

For instance, a teacher making $45,000 per year would see her annual state tax burden reduced by more than $800 on average.

An employee at a landscaping company and a stay-at-home mom making a total of about $35,000 per year would see their annual state tax burden reduced by more than $150.

A plant worker making $60,000 per year would see his annual state tax burden reduced by around $1,000.

A couple who owns a small business making about $90,000 per year would see their annual state tax burden reduced by about $1,600.

Governor Jindal said, "The bottom line is that eliminating income taxes will put your money back into your hands so you can spend it how you want."

Myth #2 – Eliminating income taxes will hurt government revenue and force future budget cuts

Fact: Eliminating loopholes and switching to a sales tax base will bring more stability in funding for government services.

A leading cause of uncertainty and volatility in the revenue estimating process is the impact of more than 460 tax exemptions, some of which radically change in value from year to year.

Switching to a sales tax base will bring more stability in funding for government services. Currently, three states – Nevada, South Dakota and Wyoming – have no personal or corporate income tax rate, and they are all running budget surpluses.

The Governor said, "Switching to a more stable tax base will help smooth out many of the rough edges and stabilize state budgeting, and stability in government attracts businesses and creates good jobs."

Myth #3 – The current tax structure is working and Louisiana has a low tax burden

Fact: Louisiana ranks near the bottom of many lists in terms of simplicity, fairness and stability.

The Governor noted that while the more than two-decade out-migration problem has been reversed, the tax code in Louisiana is playing a role in losing people.

Between 1995 and 2010, IRS data reveals a significant migration in the nation's population to certain areas of the country. During this period of time, $2 trillion transferred around the country to new population areas. In that same time period, Louisiana lost over $6 billion in adjusted gross income to other states.

Governor Jindal said, "People are mobile, and they can move – and they will move – to find new jobs and opportunities for their families. This is exactly why states with no income taxes are outperforming other states in terms of economic growth and population growth."

The Governor noted that over the last ten years, more than 60 percent of the three million new jobs in America were created by the nine states without an income tax, and, over the past decade, states without income taxes have seen nearly 60 percent higher population growth than the national average.

Myth #4 – Eliminating income taxes will hurt retirees and poor people.

Fact: Governor Jindal's plan protects low-income families and retirees who pay little or no income tax currently by creating the Family Assistance Rebate Program and Retirees Benefit Program.

The Family Assistance Rebate Program compensates low income households based on the impact of the increased sales tax over any benefit from the reduction of income taxes.

The retiree benefit program provides a rebate for eligible retirees – including municipal, state, federal, Social Security, disability, and private sector retirees – that have less than $60,000 adjusted gross income.

The plan also protects food, prescription drugs and utilities from increased sales taxes.

Governor Jindal said, "These provisions ensure retirees, low-income residents and families at all income levels will be better off."

Myth #5 – If the states sales tax rate is increased, Louisiana's state sales tax rate will be one of the highest in the nation.

Fact: With the increased rate, Louisiana's state sales tax rate will be the 24th lowest in the nation and one of the lowest in the region.

The state sales tax rate will actually be one of the lowest in the region. Texas has a 6.25 percent state sales tax, Mississippi has a seven percent state sales tax and Arkansas has a six percent state sales tax.

Under the new system, Louisiana's state sales tax rate would be 24th lowest in the nation. The effective sales tax rate would be between 3.12 percent and 4.34 percent, with low-income earners on the lower end of the scale and high- income earners on the higher end of the scale.

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