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After the 2012 elections, Louisiana Gov. Bobby Jindal (R) tried to position himself as someone who could help lead his party in a smarter direction. He famously argued he wants Republicans to "stop being the stupid party" and move away from "dumbed-down conservatism."
The rhetoric was appealing at a surface level, but the problem comes when we see how the governor's intentions manifest themselves in public policy.
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."
Jindal will reportedly meet with state legislators over the next few weeks to talk about his tax plan in more detail. It'll be something to look forward to, I suppose.
But while we wait for specifics, let's pause to note how spectacularly bad this idea really is. In effect, Jindal wants to stop taxing what people (and corporations) earn, and instead tax what they spend.
That, of course, would mean pushing Louisiana's income and corporate tax rates to zero, and increasing Louisiana's sales taxes to, well, we don't quite know yet. But since the entire effort would be "revenue neutral," it means sales taxes would have to go up enough to cover every penny in lost revenue from the elimination of income taxes.
Take a wild guess who'd benefit -- and who wouldn't -- under such a system.
Michael Kinsley wrote a piece several years ago that stuck in my memory.
It's a zero-sum game: Every dollar someone's taxes go down is a dollar someone else's go up. What you spend every year is the amount you earn minus the amount you save. On average, Americans save practically nothing, but wealthier people save more. Very poor people actually spend more than they earn, while Bill Gates and Warren Buffett couldn't spend more than a small fraction of their income if they tried.
Quite right. In this case, Jindal wants Louisianans to pay zero income taxes, which would necessarily mean a huge break for the very wealthy, while lower-income people in the state would suddenly see enormous sales taxes on everything they buy.
We'll know soon enough whether this has a credible chance of becoming law in the state, but it's a dreadful, hyper-regressive proposal.
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All the Governor's are trying to get their names on the national scene. Chris Christie, Marco Rubio, Paul Ryan, Jeb Bush, Bob McDonald and Scott Walker on the Republican side. Let's not forget Rick Perry. Perry is trying to position himself and fertilize his future possible run for the president. He didn't remember how bad he looked when this "Streaking Texas Turky" flamed out, crashed and burned in "Oopsville" on the national stage. Democrats have O'Malley of Maryland and Cuomo of New York baiting the waters for a run. Beyond all this is Hillary Clinton with her "no comments" look while holding court. No matter what she says, she's still in the running! Do not sit on the sidelines and allow the few with the most power and stroke to make decisions that will effect you directly without your input. We must remember that money and power in the hands of fewer and fewer people with stricter less compassion has taken hold in many states and Washington is their next target. Do not sit on the sidelines and allow others to make decisions that will effect you, or your family directly, without your input. Get active in local, state and national politics and keep yourselves informed. We can make a great change in the 2014 Mid-term election!
I actually like one piece of this ... removing taxes for corporations ... except on dividends paid to foreign investors and on resource consumption but I would make up for the lack of revenues by increasing the taxes on dividends and capital gains ... and by making an even more progressive income tax.
I think corporations should lose their "personhood" in every aspect -- free speech, paying taxes, lobbying, making political contributions .... Corporations are not people and should not be treated as such in just about anyway.
Would a pure consumption tax be MORE regressive then the combination of income AND consumption tax currently is? I'm not convinced. This podcast has largely informed my view on the topic: http://www.npr.org/blogs/money/2012/10/18/163106924/a-tax-plan-that-economists-love-and-politicians-hate
Mr. Jindal's proposal is certainly fraught with Great Expectations. Unfortunately, a 3% increase from increased tax revenue probably will not cover any forseeable budget deficits that the state may incur. As one of the most beautiful and welcoming states in the Union, Louisiana is in a coveted position as offering superlative recreation AND impressive job-growth opportunities for it's corporate AND private citizens. Louisianan's enjoy a great standard of living, as desirable property is plentiful and inexpensive, the people are great and the Good Times are always rolling in the Bayou State.
Maybe so on Bourbon Street, but you are obviously not a resident of the state. High in poverty, many kids get free lunch at schools.
Low cost of living, yes, but low average wages. Schools have cut teaching positions, and can have 33 kids in a class. LSU and other state colleges have suffered massive budget cuts (but not for football). Many residents without medical insurance or inadequately insured. Very high auto insurance premiums.
Locally, unemployment may be fairly low, but the only jobs available are in retail, fast food, & medical fields. Many of those pay minimum wage or LESS.
Yes, homes are less expensive here. If you can sell your home in a poor market to move elsewhere, your proceeds will not pay for a comparable home in another state.
Link to another good article:
http://www.classwarfareexists.com/bobby-jindals-recent-tax-proposal-will-cut-taxes-for-the-rich-raise-taxes-on-the-poorelderly/