Louisiana Governor Wants to End Income and Corporate Taxes

Louisiana Governor Wants to End Income and Corporate Taxes
January 11, 2013

Steve Stanek

Steve Stanek (sstanek@heartland.org) is a research fellow at The Heartland Institute and managing... (read full bio)

Louisiana Gov. Bobby Jindal (R) has announced he plans to ask legislators to end the state’s personal income tax and corporate tax and replace them with a higher sales tax.

Jindal said in a statement released January 10:

"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. We want to keep the sales tax as low and flat as possible,” Jindal said in a statement.

"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.

"Tax reform will remove administrative burdens from families and small businesses and improve Louisiana's business prospects; create more business investment opportunities with increased job growth; and raise the state's profile in national business rankings.

"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. 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."

Details to Come

Details apparently are still to be worked out. Louisiana’s next legislative session begins in April.

Kevin Kane, president of the New Orleans-based Pelican Institute for Public Policy, said Jindal months ago made clear tax reform “probably would be his priority issue” in this year’s legislative session.

“Louisiana over the years has had a number of odd things in its tax code, like businesses paying inventory tax. There are all sorts of taxes that are not business-friendly. In some cases, rather than get rid of them, they’ve offered credits, tax breaks, refunds. The result is we have a tax code where businesses and individuals at the end of the day pay low taxes in relation to states like New York or California, but our taxes are a lot more complicated than in other states like Texas,” he said.

Simplification Benefits

Kane said making the tax code simpler would make doing business in the state easier and more efficient.

“With [the state’s current] tax code, you have to do a lot of navigating” to get tax burdens down to where they should be, he said.

Ending the personal income tax also would leave more money in the hands of individuals and end their need to file state income tax information.

But he cautioned the governor so far has provided no details beyond the statement from his office. Until the details are known, there’s no way to know how workable the plan might be, he said.

Steve Stanek

Steve Stanek (sstanek@heartland.org) is a research fellow at The Heartland Institute and managing... (read full bio)