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Tax Reform Is Aimed at Making Louisiana More Appealing to Business

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Governor Bobby Jindal’s tax reform plan would rearrange how the state collects its revenue.  The Jindal administration’s plan would eliminate personal and corporate income taxes and replace it with an increased state sales taxes. The plan is aimed to be revenue neutral, so the state is not collecting more or fewer tax revenues.  Right now, the state’s tax system is complex, over 460 different tax exemptions and exceptions, different parish tax rates, and a myriad of local taxes, state taxes, state reimbursement of local taxes.

Sales taxes are the target tax to increase because it is the least volatile tax.  When the economy improves, sales tax revenue increases.  When the economy declines, sales tax revenue fades rather than drop suddenly like income tax does when a large number of workers become unemployed.

But the plan is revenue-neutral, not revenue-reducing, meaning the tax burden is aimed to stay the same.  Louisiana actually has the 47th highest tax burden in the nation, better than Texas which is 45th.  Really, Louisiana is very competitive nationally to attract businesses, but hasn’t attracted as many businesses as neighboring Texas.  Why?  Largely because of a complex, confusing tax code, odd taxes that don’t end up costing businesses, but are a hassle to itemize.

The Jindal tax reform plan is still being worked out and state officials say that it still has to go through the legislative process and will see some tinkering before it comes law.

So, we ask in today’s 710 KEEL Poll Question of the Day:

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