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Mar 14, 2013 11:26 PM by Erin Steuber

Gov. Jindal Tax Reform Proposal: Eliminate Income Taxes

Governor Bobby Jindal gave a rundown for his plans to re-write Louisiana's tax laws. The plan would eliminate personal and corporate income taxes, and increase sales tax.There are already nine "no-income tax states", and if Jindal's tax reform passes, Louisiana would become the tenth.

The end of tax season is right around the corner, but next year, if Governor Jindal's tax reform passes, you won't be paying any income tax.

"We are not presenting to you, today, a plan etched in stone," said Jindal.

According to the Jindal administration, eliminating state income tax will cost the state $2.8 billion each year. To offset that, Jindal is proposing an increase in sales taxes from 4 percent, to 5.8 percent; Increase cigarette tax from $0.36 to $1.41; And new taxes would be levied on a wide-range of services from haircuts to landscaping.

"If he gets 5.88 percent, you combine that with local tax rates in this state, that's going to put us number one in the nation," said Republican John Maginnis.

According to the Governor's administration, the tax burden, for all brackets, would drop.

For example, looking at his numbers, households making between $40,000 and $50,000 a year are currently paying $1,185 in income taxes. Under his plan, he says, that same household would pay $455 less in taxes every year.

But critics dispute that.

"This proposal amounts to the largest tax increase on Louisiana families that's ever been proposed," said Stephen Handwerk, the Executive Director of the Louisiana Democratic Party. "The dramatic amount that Louisiana families will have to pay, in replacement let's say, of what is being deducted out of their payroll checks is just, well it's astronomical."

Lawmakers will consider the ideas in the legislative session that begins next month. If it passes, the changes would go into effect January first.

"I hope it's dead on arrival. You know, the Governor, who certainly seems to be campaigning for his next job, I certainly would hope he would stop utilizing Louisiana as his personal, ideological experiment, and he'd realize this is really hurting families," said Handwerk.

Another part of Jindal's proposal is to remove more than 200 tax breaks and exemptions, and limit the state's economic development incentives for the film industry. Governor Jindal told lawmakers he expects them to help make those cuts, saying the more they do, the less the sales tax will have to increase.

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