Gov. Bobby Jindal. (Associated Press)
Last Modified: Thursday, January 10, 2013 5:39 PM
BATON ROUGE (AP) — Gov. Bobby Jindal is proposing to eliminate Louisiana's personal and business income taxes in exchange for higher state sales taxes and the removal of some tax breaks currently on the books, a tax swap that will be the centerpiece of his planned tax code rewrite for the next legislative session.
Jindal's shopping the idea to lawmakers, who will consider it in the regular session that begins in April. He described the proposal Thursday as a way to save Louisiana families money and make the state more appealing to business and industry.
"We are meeting with every legislator over the coming weeks to discuss the details of the tax reform plan. Our goal is to eliminate all personal income tax and all corporate income tax in a revenue neutral manner," the Republican governor said in a statement.
He didn't say how much sales taxes would need to be raised — or which tax breaks he's proposing to eliminate — to fill the nearly $3 billion gap that would be left by eliminating income taxes. The state's sales tax rate is 4 percent, but local municipalities also charge additional sales taxes.
"Eliminating personal income taxes will put more money back into the pockets of Louisiana families and will change a complex tax code into a more simple system that will make Louisiana more attractive to companies who want to invest here and create jobs," Jindal said.
With local and state sales taxes combined, Louisiana already has one of the highest sales tax rates in the nation, even before any changes proposed by Jindal. Critics of sales tax hikes say they fall disproportionately harder on the poor, because sales taxes take a larger slice of their earnings. The state's income tax, by comparison, has steps where a larger percentage of income is paid in taxes the more a person or household earns.
"At a bare minimum, a tax overhaul should not be an excuse to make the state's poorest citizens pay more, and they would suffer the most from the governor's proposal to raise sales taxes," said Jan Moller, head of the Louisiana Budget Project, a left-leaning organization that advocates for low- to moderate-income families, in a statement.
Moller said Louisiana already has one of the country's most unfair tax systems to the poor.
"Eliminating income taxes threatens to make this problem worse," he said.