Jindal plan estimated to boost business tax costs
BATON ROUGE, La. (AP) — Gov. Bobby Jindal’s tax restructuring plan would shift $500 million in tax costs from individuals to businesses, the governor’s leader on the effort said Tuesday.
Tim Barfield, executive counsel for the Department of Revenue, said that though business tax costs would grow, the governor’s plan would benefit companies by giving them increased stability and simplicity.
He also renewed his claims that nearly all households would see a tax break from the governor’s plan, providing lawmakers with reworked data after complaints from a group of ministers that the previous analysis didn’t take into account all the sales tax changes.
Jindal proposes to eliminate state income taxes for individuals and businesses, in exchange for higher sales taxes, removal of tax breaks and sales taxes charged on more items like haircuts, accounting work, office janitorial services and cable TV.
The package will be considered in the legislative session that begins April 8.
Lawmakers on the House Ways and Means Committee, which is combing through the details of Jindal’s proposal, worried that the tax changes would create new administrative headaches for businesses.
They also questioned whether businesses would seek to pass along their increased tax burden to their customers, eliminating the benefit that the Jindal administration says most families would get under the tax overhaul.
“Help me understand how shifting it from businesses to individuals, that it’s not going to come back to individuals somehow,” said Rep. Mike Danahay, D-Sulphur.
“I don’t doubt in micro-cases you’re going to have some passed along to consumers,” Barfield said.
But he said the entire state would benefit from the improved economy that comes from a tax system that he predicted would draw new economic development to Louisiana.
Barfield cited a report released Tuesday from the right-leaning Beacon Hill Institute in Boston that says Jindal’s tax restructuring would spur economic growth, creating thousands of jobs and new investment in Louisiana by shifting to consumption taxes.
“In general, the adoption of the governor’s package leads to improvement in the state economy,” the report says.
Critics have said the Republican governor’s proposal would be unfair to the poor and the middle class because it would make them pay a larger percentage of their income toward state government operations and would give larger tax breaks to the wealthy.
The Department of Revenue released tweaked data predicting all individual income ranges would see a benefit from the governor’s proposal.
A group of 300 ministers said the previous data released by the department didn’t appear to include the new sales taxes on services, such as cable TV and Internet services, zoo visits, and veterinary treatments for pets.
The new revenue analysis still projects benefits for all household ranges, but it changed the underlying assumptions of what was currently taxed, a move that appears to shrink the costs of the increased sales tax.
Questioned about the change, revenue department spokesman Doug Baker said the first figures used were preliminary and the analysis was updated to include the best information available.
On other parts of the Jindal plan:
— A proposal to give tax rebates to low-income residents to help offset the costs of the sales tax increases would be run through the same system as welfare benefits and food stamps, Barfield said. He said about 650,000 families would be eligible and the program would cost an estimated $110 million and would be adjusted annually for inflation.
— A tax rebate program for retirees and military whose income isn’t currently subjected to state income tax would cost about $50 million per year and would be adjusted annually for inflation, Barfield said. He didn’t have an estimate of how many people would be eligible for the rebates, which would be administered by the Department of Revenue. Barfield suggested the rebates, however, might be subject to federal taxes as income.
By MELINDA DESLATTE,Associated Press