Pelican Institute For Public Policy Says Gov. Jindal’s Tax Swap Plan “Would Spur Economic Growth”

The conservative think tank has released a study endorsing La. Gov. Bobby Jindal's tax reform proposal.

Kevin Kane, President of the Pelican Institute for Public Policy, says the plan would "spur economic growth" and predicts a positive effect on individuals and businesses:

A consumption tax, like a sales tax, is probably a more effective way to collect necessary revenue...They'd be able to use more of their money...and put it to more productive use. Businesses wouldn't be paying an income tax (and) could invest and grow their businesses and that would lead to more job growth in the state.

The study, which analyzed the effects of eliminating state personal and corporate income taxes while raising the state sales tax nearly 2%, claims Jindal's tax swap plan would enable businesses to create over 10,000 new jobs in Louisiana by 2017, boost investment in the state by $183 million, and increase real disposable income by $1.749 billion. The think tank says the plan would provide, on average, an extra $910 for each of La.'s households.  "This study shows that Governor Jindal's tax reform plan gives Louisiana a unique opportunity to grow its economy and boost the income of its citizens," says Kane. "Doing away with the income tax is really a positive thing."

Meanwhile, the La. House Ways and Means Committee met Tuesday to vet Gov. Jindal's tax reform proposal. La. Department of Revenue Secretary Tim Barfield, Jindal's point man on his tax swap idea, charted outlines of individual taxpayers by income amount and income taxes paid. He said the charts focused on W2 salaries and personal income. Barfield said they arrived at their data analysis using information provided by the Consumer Expenditure Survey which computes income data and the net impact on increases of sale taxes.

According to Barfield, 35% of current sales taxes are paid by business and 65% by individuals. Under the new program, 48% of those taxes would be paid by business and 52% by households.

Barfield said the new tax proposal would be less complicated, more efficient, more transparent and easier to understand, and, according to the Business Tax Climate Index within the Tax Foundation, Louisiana would rise from 32nd  to 5th in the nation for positive business climate.