Taxpayers are beginning to get bits and pieces of information on Gov. Bobby Jindal’s plan to eliminate all state income taxes. The governor has also begun his expensive political sales pitch to convince the doubters. However, there are still some genuine concerns about his increased emphasis on higher and broader sales taxes.
High sales taxes are especially hard on the poor, low-income residents, retirees and businesses. Tim Barfield, chief spokesman for the governor’s plan to swap income for higher sales taxes, insists tax relief will be built in for the first three groups. The news isn’t so good for businesses that have to collect the higher sales taxes and get less compensation for their work.
Despite Barfield’s assurances, two faith-based groups expressed concerns this week for the poor and low-income citizens. Some conservatives, who support Jindal’s proposal without reservation, quickly threw cold water on the church groups’ reservations.
A reader of The Advocate of Baton Rouge said, “Poor in America equals lazy in America.” Another said he “could care less about the parasites on welfare having to pay higher sales taxes …” Still others thought church groups shouldn’t get involved in politics.
Then, there was this observation from another reader: “I’ve stated this before, but it bears repeating. The rationale behind this tax swap is derived from a central theme of modern conservative thought. That is, if you are poor or struggling, it’s your own fault … . It’s why Jindal can offer to tax materials for a Habitat for Humanity project, but not the quartermil-a-year salary of his front man on taxes. That’s economic morality as defined by the modern conservative.”
The reader was referring to Barfield’s $250,000 annual salary as acting secretary and executive counsel for the state Department of Revenue. Barfield couldn’t become secretary of the department because the Legislature in the state budget limited the secretary’s salary to $124,000 a year.
Businesses appear to bear the brunt of the tax swap. They won’t be getting any special consideration for their added workloads to collect higher and broader sales taxes. In fact, the fee they get for collecting sales taxes will probably be reduced. And some business tax exemptions will be eliminated.
The tax plan is adding a 5.88 percent state sales tax to 36 different types of services not currently subject to sales taxes. The current 4 percent state sales tax is being raised by 1.88 percent, and that is an additional burden on businesses already collecting the 4 percent tax. These additional taxes are necessary to make up for the loss of $3 billion in income tax revenues.
“It’s very clear that business will be taking more of this burden,” Barfield said Monday.
Jindal launched his statewide promotional tour Tuesday in Houma. He and his spokesmen insist “everyone will pay his fair share, but no more than that.” They said their overall goal is to reform a tax code that is complex, unstable and unfair.
Two of the pluses the governor is touting are a bit of a stretch to make higher sales taxes sound more acceptable. Jindal said the plan protects food, prescription drugs and residential utilities from increased sales taxes.
Just who are he and his team trying to fool here? When former state Rep. Vic Stelly of Moss Bluff came up with his plan to swap some sales taxes for higher income taxes back in 2002, he put those sales tax exemptions in the state constitution. Stelly knew the voters would like the idea and would never agree to tax those items again.
It is also interesting that an argument that helped pass the Stelly Plan is being debunked by current arguments in favor of higher sales taxes. Stelly supporters said income taxes form a more stable and reliable tax base than sales taxes. Jindal’s team insists sales tax are more progressive and reliable.
The governor also plays down the fact his increased state sales tax helps make Louisiana’s total state and local sales tax rates the highest in the country. Jindal emphasizes the higher 5.88 percent state sales tax would be the 24th lowest in the nation. However, he conveniently overlooks the fact that people have to pay both state and local sales taxes.
Jindal is correct when he says eliminating income taxes improves the state’s business image. Higherincome citizens will also benefit with removal of income taxes. Closing tax loopholes is another plus.
The governor admits our business climate is better, unemployment is down and the economy is on the upswing. However, he adds there are still many citizens either looking for work or better-paying jobs and young people are leaving the state for better opportunities elsewhere.
Supporters and opponents would probably agree there are good arguments on each side about what Jindal is proposing. What legislators have to determine is whether Jindal is offering the better solution to the state’s money problems.
A bigger dilemma this tax swap doesn’t address is the financial squeeze caused by the mid-year budget cuts that have taken place since Jindal took office in 2008. The governor appears to have relegated budget problems to the sidelines while he works on his political image and the state’s business climate.
Jim Beam, the retired editor of the Lake Charles American Press, has covered people and politics for more than five decades. Contact him at 337-494-4025 or [email protected].