Last Modified: Tuesday, January 22, 2013 6:49 PM
Gov. Bobby Jindal’s tax reform proposal to abolish the taxes on personal and corporate income and franchise taxes, and replace them with a higher sales has spawned myriad opinions and has various camps lining up in support or opposition.
Income and franchise taxes generate about $2.8 billion a year. The state’s current 4-cent sales tax generates about the same amount. The math suggests that for state services to remain the same, the sales tax may have to be doubled to match the current revenue stream.
The governor deserves plaudits for addressing tax reform in the state, a pursuit akin to wrestling with a lion.
Proponents believe the tax swap would spur more economic growth in the state, resulting in more jobs.
Opponents believe that raising the state sales tax would place a burden on the poor in this state, of which Louisiana has legions.
All of this will be thrashed out in the coming weeks when the governor presents his final package and in the spring when the state Legislature meets.
But there’s another by-product that all parties need to consider. Jindal says he wants the plan to be revenue-neutral.
That’s idealistic, to say the least.
When state Revenue Secretary Tim Barfield, the governor’s point man on the tax overhaul, met with the American Press’ editorial board late last year, he said here’s the scenario that causes him sleepless nights: The package fails to meet Jindal’s goal and brings in less money than the current state tax mechanisms.
A number of people, including state Treasurer John Kennedy, believe the state budget remains bloated and there’s plenty of fat to trim.
What happens if the Jindal administration is, say, $500 million off in its revenue projections if and when the plan is approved? Other than dramatically reducing state agencies’ budgets at the beginning of the fiscal year, the budget ax would once again fall without mercy on higher education and health care because so many other areas of the budget are constitutionally protected from having to absorb draconian budget cuts. Quite frankly, both health care and higher ed in this state have been cut to the bone.
Jindal’s decision to address tax reform is courageous. We’d feel much better about it if he would have preceded this latest reform campaign with a successful push to free up more areas in the state budget so that cuts could be more evenly distributed when revenues wane.
That would be putting the horse in front of the cart. Remember this: the Jindal administration has been superb in getting reform legislation approved.
Getting it implemented without some serious drawbacks? Not so much.
• • •
This editorial was written by a member of the American Press Editorial Board. Its content reflects the collaborative opinion of the Board, whose members include Bobby Dower, Ken Stickney, Jim Beam, Crystal Stevenson and Donna Price.