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Beam: Jindal's new tax plan doesn't add up

Last Modified: Wednesday, April 03, 2013 6:23 PM

By Jim Beam / American Press

Nothing but positive news comes out of the executive offices of Gov. Bobby Jindal. The governor’s approval rating has nose-dived, 62 percent of those surveyed in a recent poll don’t like his plan to swap sales for income taxes and some of his fellow Republicans in the Legislature think his budgeting process stinks. If any of that bothers those eternal optimists, we would never know it.

Voters are unhappy with state budget cuts to higher education and health care, the privatization of charity hospitals and the governor’s plan to swap higher state sales taxes for the elimination of income taxes. Timmy Teepell, Jindal’s political adviser, gave us more of that glowing optimism. He said the governor has a low approval rating because he is tackling challenges.

No one was surprised Tuesday at the administration’s response when a poll revealed that Jindal’s approval rating had dropped from 51 percent in October to just under 38 percent in March.

“We care more about the unemployment numbers than approval numbers, and right now, we still have too many Louisianians unemployed and underemployed,” spokesman Kyle Plotkin said. “That’s why our No. 1 focus is growing the economy and creating jobs so that we can make Louisiana the best place in the world to raise a family and find a good-paying job.”

Jindal was in Lake Charles Monday to promote his tax swap, and blamed the current complicated tax code for the state’s high poverty rates. While that may be a factor in poverty, there is general consensus that an under-performing education system is the real culprit. The governor made that point last year when he rushed education reforms through the Legislature.

Few would disagree that getting rid of state income taxes is a worthwhile goal. States without them are definitely preferred by business and industry and citizens looking for great places to live, work and retire. So, why is the Jindal team having so much trouble selling the idea? Let’s look at a few reasons.

In order to raise the $3 billion in lost income tax revenues, the governor’s plan would increase the state’s sales tax from 4 to 6.25 percent. Add in some local sales taxes totaling over 4 percent, and the overall tax rate reaches nearly 11 percent, highest in the country.

Jindal said sales tax exemptions reduce the proposed 6.25 percent state sales tax increase to a range from 1.14 to 4.96 percent — the 37th lowest state sales tax in the country. He totally ignores those local sales taxes. And a 6.25 state sales tax would definitely put local governments at a disadvantage when they tried to renew or increase their sales taxes.

Faith-based organizations, Democrats and agencies that speak for the poor and low-income wage earners in this state said the higher state sales tax would hit those residents hardest. Retirees who don’t pay state income taxes would also pay higher taxes.

Jindal spokesmen said rebate programs would be set up to give money back to the poor and low-income families and the retirees. Critics said many of those who would benefit wouldn’t be able to negotiate the complex system. Hundreds of millions of dollars in rebates currently available to taxpayers for payments they made to the state-owned homeowners insurance company are left on the table every year.

Over three dozen services that don’t currently pay the state sales tax would start paying them under the governor’s proposal. And that is one of the reasons the Public Affairs Research Council questioned the administration’s numbers.

The research agency said the plan came up from $500 million to $650 million short. Those findings were disputed, but Jindal shortly thereafter decided a 5.88 percent state sales tax wasn’t sufficient and decided to raise that to 6.25 percent.

The Louisiana Association of Business and Industry then joined the opposition ranks after learning businesses would absorb a $500 million impact from those higher taxes.

The administration claims its plan reduces the tax burden across every income level, but that is difficult for most folks to comprehend. Steven Sheffrin, a professor of economics at Tulane University, told thelensnola.org it can’t be done.

“If you do the accounting correctly, not everyone can get a tax cut,” Sheffrin said. “If you’re trying to raise the same amount of money as today, something has to give. Someone somewhere will have to pay more money. How can people in every income bracket get a tax cut? It doesn’t compute.”

Jindal said here this week the tax swap plan is a work in progress, indicating his administration is open to suggestions about how it can be improved. That would definitely be a change from the attitude displayed last year by some of those who sponsored and spoke on behalf of the governor’s education and retirement reform programs.

Rep. Joel Robideaux, R-Lafayette, will guide Jindal’s plan through the House Ways and Means Committee. He admits there are hurdles to its passage and it needs a lot of work. That is certainly putting it mildly. However, he also mentioned another political reality that can’t be overlooked in Louisiana.

“If the governor’s pushing something, it’s never dead on arrival,” Robideaux said.

We can hardly wait to see how all of this plays out at the legislative session beginning Monday.

• • •

Jim Beam, the retired editor of the American Press, has covered people and politics for more than five decades. Contact him at 494-4025 or jbeam@americanpress.com

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