Governor Jindal brings income tax repeal case to Monroe - KNOE 8 News; KNOE-TV; KNOE.com |

UPDATE: Governor Jindal brings income tax repeal case to Monroe

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MONROE, La. (KNOE 8 News) - Governor Bobby Jindal was in Monroe Friday talking about his new tax reform plan, to eliminate state income tax and raise sales tax.

One state senator says passing this is betting on a chance. Governor Jindals believes a revamp of Louisiana's tax code is needed, and fast. Jindal says, "our top priority is to get rid of Louisiana's income taxes."

The new plan would eliminate state income tax, and raise sales tax by 2 cents on the dollar. Jindal says, "we know that states without an income tax grow faster in terms of population growth, and in terms of job growth. That's what we want for Louisiana."

Some state senators aren't buying it. Senator Bob Kostelka says, "these are projections, these are assumptions." With the proposal of raising sales tax, some are asking if people will go to other states to shop?

Jindal says, "our states sales tax would still be lower than our neighboring states. We would be 24th lowest in the country. We would be lower than Mississippi, Arkansas, and Texas." Kostelka says as of now if you live in the City of Monroe, you are paying an almost 10% sales tax.

Kostelka say, "add another 1.88 or 2%  then you jump up to 12 or 13% sales tax over all." Now income tax brings in around 3 billion dollars to the state. Jindal says, "by actually getting rid of the income tax, we can have fast economic growth; and more better paying jobs in our state." Kostelka says, "by passing this its betting on a hope, of what it will mean in revenue for the state."

Kostelka says there's no guarantee sales tax revenue will match what's collected through income taxes. Jindal says states without income tax see more job growth and that's what he wants for Louisiana.

The plan is expected to be introduced during the first week of the legislative session.

MONROE, La. (KNOE 8 News) – Friday, Governor Bobby Jindal took his statewide tour to Monroe and made the case for his plan to eliminate income taxes.

The Governor says his plan, shared with the Monroe Chamber of Commerce at a luncheon, would, abolish more than 200 special interest tax loopholes and make Louisiana's tax code simpler and fairer for Louisiana families and businesses.

Here's the news release from the governor's office outlining his proposed plan:

Governor Jindal stressed that while Louisiana's economy is outperforming the southern and national economies, there are too many Louisianians that 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.

Governor Jindal said, "Since I took office, we've worked hard to make Louisiana the best place in the world to find a job and raise a family – and our work is starting to pay off. But we still have work left to do. While we are making progress, there are still too many Louisianians that are unemployed, underemployed or living in other states because they couldn't find work here. That must change.

"All of our sons and daughters should have the opportunity to pursue their dreams here in Louisiana. To do that, we must make Louisiana a better place to do business and create jobs. That's why my top priority is to eliminate income taxes and loopholes so we can make Louisiana a better place to do business and give families a fair shake. Our tax reform plan will help make Louisiana the best place to start a business, give more control to taxpayers, close special interest loopholes, protect Louisianians at all income levels, and ensure everyone pays their fair share, but no more than that."

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

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.

  1. Eliminating income taxes would make Louisiana the best place to start a business.
  2. By overhauling the tax code, eliminating income taxes and loopholes, everyone will pay their fair share, but no more than that.
  3. Loopholes will be closed so close powerful special interest groups will no longer be able to rig the system.
  4. Food, prescription drugs and utilities will be protected from increased sales taxes.
  5. 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 10 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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