Even though he still doesn’t have a final draft of his tax-swap plan, Gov. Bobby Jindal has launched his statewide campaign to sell his gospel of wealth. He’s hoping to generate citizen support that will convince wary lawmakers to back his proposals.
For opponents as well as those who are merely skeptical of Jindal’s plan, time is of the essence. The longer business leaders and intellectually honest lawmakers defer to Jindal by “waiting to see the bill in final form,” the more they play into the governor’s hands.
Think back to last year, when Jindal spouted platitudes about “education reform” but waited, literally, until the last possible minute to present his bills — then rammed them through the committee process within days, giving no one a fair chance to study them. The result was, among other things, an unconstitutional voucher plan with virtually no accountability.
He’s using the same strategy with his tax-swap plan. He offers vague promises of “fairness” and “broadening the base,” but he and his tax-swap point man, Tim Barfield, executive counsel for the state Department of Revenue, offer few specifics — and then only in response to legislative and public pressure for more details.
Barfield admitted this past week that the plan would not make everyone a winner, as Jindal cheerily (and falsely) claims. Barfield conceded to a legislative hearing on March 18, “It’s very clear that business will be taking more of this burden.” Many businesses — and many business owners — would actually pay significantly more under Jindal’s plan. Most no doubt would try to pass their added costs on to customers and clients, but many may not be able to do so for competitive reasons.
Also this past week, the nonpartisan Public Affairs Research Council (PAR) released a report underscoring the major weaknesses in Jindal’s plan — from bad numbers to more entitlements to further complicating parts of Louisiana’s already arcane tax code. “Overall, there will be a shift of the tax burden from individuals to businesses, but that burden will not be evenly shared by all businesses,” PAR noted. Lawyers’ services, for example, would not be taxed, but those of architects, engineers and barbers would — along with many, many others.
PAR cited “a new realm of laws and rules resulting from the taxation of services [and] a new annual tax form for individuals to report certain sales tax payments.” The plan thus makes parts of the tax code more complicated, not simpler — and it puts a burden on individual taxpayers to “report certain sales tax payments.”
It’s counterintuitive, to say the least, to imagine Bobby Jindal proposing more entitlements, but his plan does exactly that. As PAR notes, it would create “two new cash subsidy programs for low-income and certain retiree households.” Those entitlements would, of course, have to be administered … by more bureaucrats.
As Jindal stumps the state selling his amorphous plan, business leaders and lawmakers need to start speaking out. PAR was not totally critical of Jindal’s plan, and neither am I. As PAR put it, “The plan contains several strikingly useful reforms.” They include eliminating the corporate income tax and franchise fee, streamlining sales tax reporting and collections, and raising the cigarette tax.
Eliminating personal income taxes is not awful per se, but replacing them with higher sales taxes is — especially when Jindal’s “swap,” as PAR states, would result in significantly lower overall state revenues. We all know what would flow from that. Haven’t our colleges and hospitals suffered enough?
It’s time for businesses to get vocal about Jindal's plan. It’s time for lawmakers to propose better alternatives. Otherwise, they’re all playing Jindal’s game — a game that ultimately will have more losers than winners.
UPDATE: The Times-Picayune (via nola.com) came out against the plan Saturday morning, essentially making the same arguments that Gambit makes in its forthcoming Commentary (issue of 3/26/13, available Sunday & Monday in print). The TP and Gambit suggest the same course of action for Jindal and lawmakers: Adopt those parts of the plan that make sense, such as swapping corporate taxes for a higher cigarette tax, tightening some exemptions, and streamlining sales tax reporting and collection — but go back to the drawing board on income taxes.
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