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Apr 04, 2013
Governor Jindal Takes Case for Income Tax Repeal to the Northshore

COVINGTON – Governor Bobby Jindal addressed St. Tammany Chamber of Commerce on Thursday where he continued to make the case for his plan to eliminate income taxes, abolish over 200 special interest tax loopholes and make Louisiana’s tax code simpler and fairer for Louisiana families and businesses.
Governor Jindal stressed that while Louisiana’s economy is outperforming the southern and national economies, there are too many Louisianians that are unemployed, underemployed or that have left the state to find work.  The Governor said that a major obstacle to helping more Louisianians find work and growing the economy is Louisiana’s tax code, which he called complex, unstable and unfair.
Governor Jindal said, “Eliminating income taxes will help make Louisiana the best place for businesses to create jobs and give Louisianians more control over their own money. We’ve talked about eliminating income taxes for years so we could compete with other states and create more opportunities for people who need work, but we’ve always just tinkered around the edges of real reform. It’s time to step up and eliminate income taxes so we can unleash major economic growth that will help keep our sons and daughters here at home. 

“As it stands today, the tax code is complex, unstable and unfair. Our tax code is stifling economic growth, protecting powerful special interests and holding Louisianians back who need jobs. Louisianians deserve better. Eliminating income taxes and loopholes will put money back into the pockets of Louisianians, give everyone a fair shake and make Louisiana the best place to do business.”

Governor Jindal emphasized that the current tax code fuels the cycle of poverty in Louisiana and that overhauling the tax code will help create more job opportunities for people who are unemployed or underemployed. 

The Governor said, “The truth is that current system protects the well off and protects the powerful special interests that can afford a lobbyist and a lawyer. At the same time, the current system hurts the poor and holds them back from finding a good-paying job. The tax code fuels the cycle of poverty in Louisiana. It protects special interests and holds back the poor. 

“Poverty holds us back as a state. It’s why we have in years past been at the bottom of so many rankings. If we keep doing the same thing, we are only perpetuating another generation of poverty for some people in our state. Doing what we have been done for decades hasn't worked. It’s unacceptable. Every person in this state deserves an opportunity to succeed. That’s why it’s time to give everyone a fair shake in our tax code and create an environment where more businesses want to invest and create opportunities for our people. The best anti-poverty program is a job and that’s why I want to make Louisiana the best place in the world for businesses to invest and create jobs.”

Governor Jindal said eliminating income taxes and loopholes would have six benefits, including:
  1. Eliminating income taxes would make Louisiana the best place to start a business. A new study shows that eliminating income taxes would boost business investment in Louisiana by more than $180 million and create nearly 12,000 new jobs on top of the jobs that are already forecasted to be created.
  2. Eliminating income taxes will give more control to the taxpayer. Taxing what people spend instead of what they earn gives taxpayers more control over their own money. A study showed that eliminating income taxes would increase disposable income nearly $1.8 billion  - or more than $900 extra for each Louisiana household. 
  3. By overhauling the tax code and eliminating income taxes and loopholes, everyone will pay their fair share, but no more than that.
  4. Loopholes will be closed so powerful special interest groups will no longer be able to rig the system.
  5. Food, prescription drugs and utilities will be protected from increased sales taxes.
  6. Switching to a sales tax base will bring more stability in funding for government services.
The Governor also took on critics of his tax reform proposal – who he said were defending the current system that allows special interests to rig the system. Governor Jindal debunked the following five myths that opponents have spread:
Myth #1 – Governor Jindal’s plan will raise taxes on low-income and middle-class Louisianians.
Fact: Eliminating income taxes and closing loopholes will reduce the tax burden for individuals and families across every income level.
For instance, a teacher making $45,000 per year would see her annual state tax burden reduced by more than $635.

A plant worker making $60,000 per year would see his annual state tax burden reduced by around $900.

A couple who owns a small business making about $90,000 per year would see their annual state tax burden reduced by about $1,370.
Governor Jindal said, “The bottom line is that eliminating income taxes will put your money back into your hands so you can spend it how you want.”
Myth #2 – Eliminating income taxes will hurt government revenue and force future budget cuts 
Fact:  Eliminating loopholes and switching to a sales tax base will bring more stability in funding for government services.
A leading cause of uncertainty and volatility in the revenue estimating process is the impact of more than 460 tax exemptions, some of which radically change in value from year to year.
Switching to a sales tax base will bring more stability in funding for government services.  Currently, three states – Nevada, South Dakota and Wyoming – have no personal or corporate income tax rate, and they are all running budget surpluses.
The Governor said, “Switching to a more stable tax base will help smooth out many of the rough edges and stabilize state budgeting, and stability in government attracts businesses and creates good jobs.”
Myth #3 – The current tax structure is working and Louisiana has a low tax burden
Fact: Louisiana ranks near the bottom of many lists in terms of simplicity, fairness and stability.
The Governor noted that while the more than two-decade out-migration problem has been reversed, the tax code in Louisiana is playing a role in losing people.
Between 1995 and 2010, IRS data reveals a significant migration in the nation’s population to certain areas of the country.  During this period of time, $2 trillion transferred around the country to new population areas.  In that same time period, Louisiana lost over $6 billion in adjusted gross income to other states.
Governor Jindal said, “People are mobile, and they can move – and they will move – to find new jobs and opportunities for their families. This is exactly why states with no income taxes are outperforming other states in terms of economic growth and population growth.”
The Governor noted that over the last 10 years, more than 60 percent of the three million new jobs in America were created by the nine states without an income tax, and, over the past decade, states without income taxes have seen nearly 60 percent higher population growth than the national average.
Myth #4 – Eliminating income taxes will hurt retirees and poor people.
Fact: Governor Jindal’s plan protects low-income families, retirees, active duty military members who pay little or no income tax currently by creating the Family Assistance Rebate Program and the Assistance for Retiree and Military Rebate Program.
The Family Assistance Rebate Program compensates low income households based on the impact of the increased sales tax over any benefit from the reduction of income taxes. 

The Assistance for Retiree and Military Rebate Program was designed to ensure that retirees, active duty military and other recipients of exempt income receive a net benefit under the tax reform proposal.
The plan also protects food, prescription drugs and utilities from increased sales taxes.
Governor Jindal said, “These provisions ensure retirees, low-income residents and families at all income levels will be better off.”
Myth #5 – If the states sales tax rate is increased, Louisiana’s state sales tax rate will be one of the highest in the nation.
Fact: With the increased rate, Louisiana’s state sales tax rate will be the 37th lowest in the nation. 
The effective state sales tax rate would be between 1.14 percent and 4.96 percent, with low-income earners on the lower end of the scale and high-income earners on the higher end of the scale.  

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