And replace it with a revenue neutral sales tax?

The story…

“The bottom line is that for too long, Louisiana’s workers and small businesses have suffered from having a state tax structure that is too complex and that holds back economic prosperity,” Jindal said in a statement released by his office. “It’s time to change that so people can keep more of their own money and foster an environment where businesses want to invest and create good-paying jobs.”

Jindal said the plan would be revenue-neutral and that the goal would be to keep sales taxes “as low and flat as possible.”


The governor’s office has not yet confirmed or denied an article in The Monroe News-Star that reports eliminating the state income tax could require increasing the state sales tax from 4 percent to 7 percent.

As most of you know, this is hugely regressive for lower income folks who pay very little income tax in the first place and live from paycheck to paycheck. The sales tax goes up on all the essentials they buy. It’s merely tax replacement. Because guess what the tax rates are in Louisiana for individuals? 2% for income up to $12,500 for individuals and up to $25K for couples. 4% for income up to $50K for individuals and $100K for couples. And over $50K for individuals and over $100K for couples…it’s 6%. You don’t need to be a numbers expert to see which income brackets are getting their income taxes cut in half and which will see theirs raised.

Listen, I get that Republicans think that people will spend more if they have more in their pockets. And they will. But only if they’re closer to the bottom. Those who benefit from it the most (the wealthy) do not spending it to drive the economy. Sure, they spend some, but they are much more likely to either invest (which may or may not help the overall economy…I’ll get to that soon) or they save. That’s great for them, but when our economy relies pretty much solely on consumer spending…you can see how tax cuts like these do not help stimulate job growth.

Let’s look at this in a different way. What do wealthy people do with tax cuts? Invest. A lot. So they become shareholders. Partial owners of a company, so to speak. What do they expect that company to do for them? Make them money. How do companies make money? By maximizing profits. How do you maximize profits? By running an efficient business. How do you run an efficient business? By producing the most amount of revenue with the least amount of overhead. What is always the most expensive overhead? Employees.

See how investment doesn’t necessarily provide a clear line to jobs?

And remember, private companies are holding the biggest amount of cash reserves they have EVER had. They’re not spending. They claim that it’s because of economic uncertainty, but if you’ve ever worked in a corporate environment…waiting is not rewarded. Never. Ever. The corporate culture demands plans, action, now! These companies are keeping that money because they don’t need to spend it, not because they don’t want to spend it. At the same time, they’re squeezing every last hour out of their smaller workforces because all of that economic uncertainty makes it harder for workers to ask for better pay for the extra work they’re doing, thus benefitting all of those companies bottom lines even more. And once companies start hiring again…that’s a signal to workers to demand more pay. So it doesn’t benefit any of these companies to hire unless they absolutely need to.

What this all boils down to is that what Jindal is saying makes a decent sound bite…but does it make economic sense? On paper, no. It doesn’t. At least it doesn’t appear to make sense. And it’s not like Louisana’s poorest is in any great shape to begin with. And I personally care much more about them than those near the top. Because those near the top will always do well. They’ll find a way, tax cuts or not, to try and make as much money as is humanly possible. Our focus should be helping those who don’t have those skills to find a way up out of their situations. And raising their taxes isn’t going to do that.

Your thoughts?

Home Politics Bobby Jindal Wants To Eliminate Personal & Business Income Tax In Louisiana