Just how far is Piyush Jindal willing to go to completely undermine Louisiana’s low- and middle-income citizens—and local governmental entities? Apparently, there are no limits.
First it was the Office of Risk Management that he privatized. That affected about 150 employees, cost the state $75 million and within a year, state insurance claims were being processed not by the original company, not by its immediate successor, but by a third company from New York. Of course, the move did provide jobs for those setting up the claims—somewhere in Tennessee.
Then there was outsourcing of the Office of Group Benefits, which cost another 177 state employees their jobs. This time, about 226,000 state employees, retirees and their dependents stand to be affected by that move should health insurance premiums increase.
Jindal also closed two state prisons and Southeast Louisiana State Hospital in Mandeville, costing hundreds more their jobs. Close on the heels of that move, he announced plans to “partnership” the operations of several state hospitals in New Orleans, Lafayette, Houma, Alexandria, Monroe and Shreveport. More jobs lost.
That move, for the first time, impacted others besides state employees: the state’s working poor who depend on the hospitals for health care. Those numbers are difficult to calculate.
Last month, it was learned that the Department of Revenue and Taxation plans to close all of its satellite offices except for New Orleans. Employees in Shreveport, Monroe Alexandria, Lake Charles and Lafayette got the word just before Christmas that they would be losing their jobs.
This week, it was the Early Childhood Mental Health Support Services that got the axe, meaning another 76 jobs lost.
Thus far, the damage has mostly been restricted to state employees but on Thursday came news that will affect every living, breathing soul in Louisiana.
In a state with 17.7 percent of its citizens living in poverty (fifth-highest poverty rate in the nation, according to the U.S. Census Bureau), Jindal is proposing scrapping individual and corporate income taxes in favor of a 75 percent increase in state sales taxes—from 4 to 7 cents.
Sales taxes are already considered regressive as opposed to income taxes but for a state with that percentage of low-income families, the state’s poor would be particularly hard-hit by their having to pay increased taxes on the purchases of necessities.
Baton Rouge political blogger Bob Mann, who worked for three U.S. senators and former Gov. Kathleen Blanco and who now holds the Manship Chair at the Manship School of Mass Communication at LSU and who is also director of the school’s Reilly Center for Media & Public Affairs, perhaps said it best on his blog Something Like the Truth on Thursday http://bobmannblog.com/2013/01/10/jindals-new-revenue-plan-impose-crushing-tax-increases-on-the-poor/#more-1666:
“…A 100 percent income tax cut would be a fantastic boon to those better-off taxpayers and a giant, punishing tax increase on the poor. Perhaps they (rich and poor) all pay the same rate, but they certainly will not be paying the same percentage of their incomes in state taxes under the Jindal plan.
“Poor families spend the vast majority of their income on necessities. In Louisiana, according to a recent study by the Corporation for Enterprise Development, poor families pay an average of 10.4 percent of their income in local and state taxes, mostly sales taxes. A 75 percent increase in their sales taxes would be devastating to many of those families.
“Take, on the other hand, the top 1 percent of taxpayers, who pay only 5.2 percent of their income in state and local taxes—half the rate of the poor. Those wealthy families pay a far small percentage of their income in sales taxes.”
Piyush, as is his custom, refused interview requests, choosing instead to ensconce himself on the fourth floor of the State Capitol and sending out his lackeys to regurgitate his prepared statements.
In this case, the prepared statement said, “Eliminating personal income taxes will put more money back into the pockets of Louisiana families and will change a complex tax code into a more simple system that will make Louisiana more attractive to companies who want to invest here and create jobs.”
That was essentially the same thing he said when he signed off on the repeal of the Stelly tax plan in 2008. At the time, he said the repeal would save single filers $500 per year and those filing joint returns would save $1,000. What he did not say was a single filer would have to earn as much as $90,000 per year to save $500 and joint filers would have to earn more than $150,000 a year to save $1,000.
The 2008 median household income for Louisiana was $43,733. In 2011, it was $40,599, according to the Census Bureau.
In reality, the Stelly Plan repeal ended up costing the state $300 million per year.
He neglected to mention in that prepared statement that the elimination of corporate income taxes would not “put more money back into the pockets of Louisiana families,” but probably would put more money back into the pockets of corporations already draining the state with tax incentives, rebates, and exemptions to the tune of about $1.8 billion per year, according to the Louisiana Department of Revenue and Taxation.
For the current fiscal year, personal income taxes are projected to generate $2.58 billion and sales taxes another $2.59 billion. By comparison, corporate income taxes will produce only about $340 million after those $1.8 billion in exemptions.
Unconfirmed reports indicated that Jindal is also proposing the abolishment of severance taxes on oil and gas. That source alone produced $266 million in revenues to the state in the last quarter of 2012, a rate of more than $1 billion per year.
Jindal, in a meeting with legislative leaders that also included Revenue Secretary Tim Barfield (who doubles as the agency’s general counsel as justification of his salary that is double that of his predecessor) and Jindal Chief of Staff Paul Rainwater, passed around a sheet of paper containing his proposed sales tax exemptions but the legislators were not allowed to keep the list.
Piyush also tossed out the idea of a new cigarette tax of more than a dollar a pack.
That’s more than a little ironic given that in 2011, Jindal vetoed the renewal of a 4-cent cigarette tax, claiming at the time that it was tantamount to a new tax, forcing the legislature to pass a constitutional amendment to reinstate the tax.
Former Rep. Vic Stelly (R-Lake Charles), who initially authored the tax plan that bore his name, was contacted in Gulf Shores, AL, Thursday and his initial response was to question how the state will make up lost revenue with a sales tax “unless the tax is 30 or 40 percent.”
He said studies to replace the federal income tax revealed it would be necessary to institute a national sales tax of about 23 percent to offset the income tax revenue. “That’s on top of state and local sales taxes,” he said, adding that any figures the administration comes up with would probably be unrealistic.
State Rep. Joe Harrison (R-Napoleonville) described himself as out of the governor’s inner circle and expressed doubts about rushing through such a radical change in the state’s tax structure.
“We did that with (education) vouchers and pension reform without properly assessing the adverse effects,” he said. “I call it the ‘Custer theory.’ Gen. Custer rushed down the hill thinking he was going to mop up at Little Big Horn. Instead, he ended up wondering where all those Indians came from. I would hope that we would back off and look at this in, say, a special session so that we could give the issue a thorough airing.”
State Rep. Rogers Pope (R-Denham Springs), a retired Livingston Parish school superintendent, viewed the effects of the increase from the standpoint of local governments.
“School boards, police juries and municipalities live and die by sales taxes and in most cases, those taxes are renewable. We currently have a 10 percent sales tax in Livingston parish—7 percent local and 3 per cent state. If the governor’s proposal passes, that’s 13 percent sales tax and when those local tax propositions come up for renewal, the voters just aren’t going to go for it.”
Pope said he has no idea what Piyush is trying to do. “I’m not sure even he knows,” he said.
That sentiment was echoed by readers of the Baton Rouge Advocate.
“Jindal would not comment because he refuses to be accountable as he expects of everyone else,” one wrote.
Another reader wrote, “And how will we replace $3 billion annually. I’m going to guess cut health care, especially for the poor, cut higher education even further, cut public education, massive layoffs for public sector workers, no more infrastructure projects.”
“Way to care about the little guy,” said a third.