Know the Facts: Sales Taxes & Income Taxes
January 17, 2013
BATON ROUGE - With news outlets continuing to report on the Governor’s goal of eliminating personal and corporate income taxes, some comparisons have been made between the sales tax and the income tax, and what it means for individuals and the state.
As you continue to report on this issue, we wanted to provide you with some facts and figures to keep in mind:
1. Sales tax is a MORE STABLE form of revenue compared to the personal income tax. According to the Louisiana Revenue Estimating Conference (REC) and the Louisiana Department of Revenue (LDR), sales tax collections have historically been MORE STABLE than personal income tax collections. (REC Historical Data; LDR Annual Reports). Additionally, according to R. Alison Felix, who authored "The Growth and Volatility of State Tax Revenue Sources in the Tenth District," state sales taxes have proven to be a more stable source of revenue for year-to-year budgetary expenditures." Of course it is - 21% of our state's population is living at the poverty level & is exempt from filing due to Bobby Jindal's extreme austerity measures & failed economic development efforts. The poor still have to eat, though!
2. Over a 30-year period, the nonpartisan Tax Foundation used 26 different economic studies to determine sales taxes were MORE BENEFICIAL for economic growth than both personal and corporate income tax. (Tax Foundation Special Report No. 207 December 18, 2012) Brief online research reveals the following: "The Tax Foundation is organized as 501(c)3 non-profit educational and research organization. Its website states that journalists should describe it as: "a nonpartisan tax research group", though it has been described as having a "pro-business leaning" and it has ties to various conservative groups." - Source: http://en.wikipedia.org/wiki/Tax_Foundation
3. Eliminating personal income tax will create a business climate that encourages MORE BUSINESS INVESTMENT and MORE JOBS. According to the nonpartisan Tax Policy Center, America’s economy would steadily grow by “0.6 percent larger than otherwise after two years; 1.8 percent larger after ten years; and 3.6 percent larger in the very long run” if the nation switched to a tax system that relied on sales tax, not income tax. (Tax Policy Center) Please, Mr. Jindal, tell us more about your success as an economic developer - and no fibbing on the unlivable wage rates of most jobs in Louisiana.
4. Sales tax grows with the economy. When compared to other sources of revenue, sales tax is relatively stable during economic downturns resulting in more revenue as the need arises. Read: financially rape the poor regardless of national economic recession, high unemployment rates, inability to afford basic needs like healthcare, etc. because they still have to buy food and the state needs revenue.
5. Governor Jindal's proposal will KEEP the Constitutional protections for the exemptions of food for home consumption, prescription medicine, and residential utilities. These exemptions result in the average individual or family with income under $30,000 per year having almost half of their annual purchases exempt from state sales tax. These progressive provisions lessen the impact of the sales tax on lower income individuals and families. I totally take BJ at his word on this. He's been so honest & ethical thus far, after all. He's a good Boy Scout who would never pass any laws that would adversely affect the poor.
6. In order to offset unfair impacts to low income groups, Governor Jindal's proposal will set aside funding to operate an Earned Income Tax Credit or a similar mechanism. Nice & vague. See commentary on #5.