Friday, January 11, 2013

Louisiana GOP Governor Suggests Eliminating Corporate Tax, Paid For By Taxing The Poor

Louisiana Gov. Bobby Jindal (R) wants to eliminate both his state’s income tax and its corporate income tax, giving a big gift to the richest Louisianians and the state’s businesses. And he may pay for it by hiking the state’s sales tax, which will disproportionately hurt Louisiana’s poorest residents:

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. [...]

Jindal said the plan would be revenue-neutral and that the goal would be to keep sales taxes “as low and flat as possible.”

The governor’s office has not yet confirmed or denied an article in The Monroe News-Star that reports eliminating the state income tax could require increasing the state sales tax from 4 percent to 7 percent.

Because low- and middle-income workers tend to spend all or most of their income, a sales tax hits them the hardest. And Louisiana’s tax system is already tilted towards the richest residents, with the richest 1 percent having a tax rate that is half the rate paid by the poorest 15 percent, according to the Institute on Taxation and Economic Policy.

As the Brookings Institution’s William Gale explained, “if you move the tax from income to consumption, you’re raising the relative burden on low savers, which are low and moderate income households, so almost any revenue neutral shift from the income tax to a consumption tax will be regressive in that manner.” Under the proposal, “some may benefit, some may lose,” said Senate President John Alario (R).

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