January 31, 2013

The Daily World: Study claims state tax structure unfair

media mention

Jan 31, 2013

Written by Mike Hasten

BATON ROUGE — Like many states, Louisiana’s current tax structure is unfair to low- and middle-income families, a study examining tax structures released today says.

But the tax revision plan pushed by Gov. Bobby Jindal, dropping income taxes in exchange for higher sales taxes, would make it worse, says Matthew Gardner, head of the Institute on Taxation and Economic Policy and lead investigator on the report.

“It’s crystal clear that to shift away from income taxes to sales taxes would make an already unfair tax system even more unfair,” Gardner said. “From the respect of tax fairness, it’s absolutely wrong.”

The ITEP study shows that when state and local taxes are combined, the financial impact on about 60 percent of state’s taxpayers’ available income is double what it is on the wealthiest residents.

And when just sales and excise tax is included, the impact on low-income families is seven times what it is on the wealthiest families.

“Louisiana’s tax system absolutely is not fair and it’s not flat,” Gardner said, referring to Jindal’s statement that he wants a tax system that is “fairer and flatter.”

“The single best way to do that is to reduce the role sales tax plays and to increase the role that income tax plays” in providing state revenues, he said. “Gov. Jindal wants to do the opposite.”

“Cutting the income tax and relying on sales taxes to make up the lost revenues is the surest way to make an already upside down tax system even more so,” Gardner stated.

The Jindal administration says its goal is to grow the private economy, not the government economy, and eliminating personal and business income taxes would “put more money into people’s pockets.”

The Tax Foundation, a conservative group favored by business, supports Jindal’s move to eliminate income taxes and shift to sales taxes as the primary source of state revenue.

Gardner said if that’s the path the governor wants to take, he should strip all exemptions on sales tax and make it apply to all goods and services.



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