So today Gov. Bobby Jindal proposed eliminating state individual and corporate income taxes and raising the state sales tax from four to seven percent.
The idea is to "put more money back into the pockets of Louisiana families," Jindal's Facebook page tells us. I did some (very rough) calculations on this. Based on 2011-2012 sales and individual income tax revenues (not taking the effect of deductions into account), it could produce a fairly modest $300-ish million net savings — $2.4 billion in individual income tax revenues minus $2.1 billion in added sales taxes from an increased rate — spread out among every income taxpaying family in the state. Not evenly, either. Wealthier residents pay more income tax, so they'll save more without it. Louisiana is not a wealthy state, by the way, so many more will see, at best, pretty small tax savings from this. And at the same time it will nearly double the tax burden for Louisiana's poorest residents. (Though I can't say I know how it will affect people living below the poverty line who now have to pay state income tax anyway.) I guess it just depends on whose pockets we're talking about.
But apparently "Louisiana families" might not even see modest pocket gains, because the governor says this will all be done "in a revenue neutral manner." That means no net effect to state revenues. And that, at least in theory, means no overall savings at all. Unless we're talking about more cuts to what's left of our unimportant state services like universities and hospitals, which wouldn't come as a surprise to anyone.
Corporations, which because of state incentives barely pay taxes as it is, may, however, come out a bit ahead on this. That will probably mean more glowing reviews from Forbes, and we know the governor will like that.
Incidentally, New Orleans, this could mean a 12 percent combined state and local sales tax rate for us.