Beam: Don’t rush to eliminate taxes

By By Jim Beam / American Press

Gov. Bobby Jindal’s proposal to

eliminate the state’s individual and corporate income taxes has

generated an explosion of

reaction. The surprising thing is most of us have no firm idea of

how the governor plans to achieve his goal. Some possibilities

have been floated by his administration, like increasing sales

taxes to make up the difference, but the real nuts and bolts

are still missing.

Legislators hope Jindal doesn’t do like

he did education reform when he waited until the last minute to divulge

his plans.

And even then the bills his administration proposed were rewritten

with scores of amendments when they were first heard in

committee. Marathon hearings lasted all day and deep into the

night and ended with weary lawmakers voting for almost anything

to end the torture.

Some of that has come back to haunt Jindal as he has seen parts of his reform package rejected in the courts. The governor

is convinced higher courts will vindicate his efforts, but it hasn’t happened yet.

Meanwhile, Jindal has become a darling of the national media for his analysis of why Republicans lost the presidential election

and for his decision to end income taxes in Louisiana.

Out of the feedback that has erupted over Jindal’s relatively unknown plan come a number of factors that have to be considered

before legislators make their final decision. Here are some of them that have been advanced from a wide range of analysts:

Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming have no income taxes, and most of them enjoy a robust

economy. However, Florida and Texas also have high property and business taxes. Louisiana has neither.

Don Briggs, president of the Louisiana

Oil and Gas Association, said the state is “experiencing economic

prosperity at a time

when many other states are still recovering from the deepest

recession since the Great Depression.” He said a business friendly

environment and determined workforce are major reasons for the

state’s success. So the question is whether more incentives

will increase what is already considered unprecedented economic

development, particularly in this corner of the state.

An increase in the state’s 4 percent

sales tax is being considered as one of the major ways to make up for

the $3 billion

that will be lost in income tax revenues. Speculation is the

increase would range from 1.7 to 3 percent. The existing 8.84

percent average state and local sales tax burden is the third

highest in the country, and even the slightest increase would

probably push Louisiana to the No. 1 position.

Higher sales taxes could cause

Louisiana residents near neighboring states to shop across the line, and

force others to the

Internet. State residents are supposed to pay sales taxes on

online purchases, but the law is unenforceable. And until Congress

forces the issue, that isn’t likely to change. A higher state

sales tax could also make it more difficult for local governments

to finance their operations with sales taxes.

The poor and low-income residents pay a heavier burden than most when sales taxes are high, but they get little sympathy from

taxpayers who think doing away with the income tax is the only way to go. The assumption is that the poor are responsible

for their own plight. As one critic put it, “It is not fair when some able-bodied citizens refuse to contribute to society

and pay no taxes while governments take more than half of others’ earnings.”

Tim Barfield, the governor’s chief

spokesman on the income tax issue, also talks about raising taxes on

business activities

that could raise an additional $800 million. The Council for a

Better Louisiana, a non-profit research agency, said Texas

has sales taxes on cable and satellite TV services, credit

reporting businesses and custodial, security and information services.

Everyone knows who ends up paying those service taxes — the

citizens who use the services.

Another way to raise lost revenues

would be to eliminate current sales tax exemptions. You can be sure

those who benefit will

lobby hard to keep them. Briggs, for example, said the 23 oil and

gas exemptions are “vitally important to the health of the

industry.”

Then there is the issue of local and state tax burdens. Tax Foundation, an organization that tracks tax rankings, has Louisiana

in 47th place. Only Tennessee, South Dakota and Alaska have lower overall tax burdens.

The foundation said Louisiana’s per capita state income tax is $659 per person, which puts it in 34th place. New York is No.

1 at $2,311 per capita. Tennessee is lowest at $35 per capita and in 43rd place, 9 places below Louisiana. The other seven

states have no state income taxes.

Doing away with state income taxes is

certainly a desirable goal. Who wouldn’t like to do away with all

taxation? However,

government is designed to do for its citizens what they can’t do

for themselves. The preamble to the state constitution says

that includes protecting individual rights to life, liberty, and

property; affording opportunity for the fullest development

of the individual; assuring equality of rights and promoting the

health, safety, education and welfare of the people.

Those are noble goals and that is why

Gov. Jindal and the Legislature need to give the proposal to eliminate

state income

taxes the serious and lengthy deliberation it deserves. Many

factors come into play, and each should be analyzed with extreme

care. None should be ignored in a rush to do what may be popular,

but perhaps not in the best interests of the people they

serve.

• • •

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