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.
Louisiana Voice 
I guess it wouldn’t count as “raising taxes” on Jindal’s record if it’s just on poor folks.
You really put the words in my mouth with this one. Pyush’s plan is just another effort to disenfranchise the poor, elderly on fixed incomes and disabled and even working class and lower middle class families with children. Even trying to placate people with not taxing food and prescriptions could leave people unable to buy adequate quantities of clothing, school supplies, cat food, and toilet paper, among other necessities. because the sales taxes would be so high. Meanwhile, the wealthy, as they are already, would continue not to do their share and may even trip over to Mississippi to avoid the higher sales taxes. I am sure that if their taxes are lower they could manage to put a Walmart and a Sam’s Club just over the state line and the Natchez Walmart would put the one in Vidalia out of business.
In addition, he wants to dispose of corporate taxes, a very important source of revenue.
It is time and past time to get rid of Piyush. He must not be allowed to finish this term and people of good will need to tell their state legislators that it is either him or them.
A recall effort has already failed and I suppose you are now talking about impeachment—which is even more difficult to pull off. While his policies are scatterbrained and counterproductive, there is no criminal action so what charges would you bring? I’m afraid we’re stuck with him—and he knows it.
Tom, maybe the answer is that the legislature will develop a backbone and quit rubber-stamping his outlandish proposals.
disenfranchise the Poor? Have you seen what you can buy now with the magical EBT card? and that’s with the taxpayers money. Obama’s medical device tax is what will hurt the poor. At least the ones that don’t pay income tax will be paying some kind of tax. If you’re gonna take it from us, take it from them (EBT users) too. I’m all for getting rid of income tax, it’s more fair and isn’t that the operative word?
I am so, so, so very sick of people like you. May you soon find out why being poor and living on EBT cards is not such a wonderful life.
This is so obviously detrimental to those who can least afford to pay it, that I predict it will be used as a bargaining point like some of the most blatantly off-the-wall retirement proposals last year. Texas does not have a state income tax, if I am not mistaken, but instead has huge property taxes. It would not surprise me if this is where the tax issue is headed. This change will hurt the local governments, particularly the fire and police departments who are dependent on local sources of funding. The obvious solution is to make business and industry pay a more proportionate share of taxes. The huge give-always to attract business only hurt the small, local business owner.
His goal appears to be to bankrupt the state so he can step in an completely revamp the tax code, seniority system, and state employee retirement and insurance. I see no other possible reason to intentionally drive the state off the road and into a ditch.
We can only hope this was considered a political “balloon” being floated just to measure the response. However, given the huge downsizing going on in the department of revenue, including the recently announced layoff of the tax audit appeals section, I doubt it. Rumors–though disavowed–were that they would be laying off the section that scans in the tax returns, but they have determined that they would need those folks at least through June of 2014 even if the sales tax disaster passes, as the earliest it could be implemented would be Jan 1 of 2014.
The regressiveness of this measure notwithstanding, if revenue projection is difficult now, just consider how difficult it will be trying to project based on anticipated consumption. As someone above noted, there will be a glut of shopping development along the borders driving down collections not only for the state, but also the local entities. This would be a deterrent to tourism even if tourists will be able to fill out forms to get a rebate on state taxes paid while visiting.
I agree that this may be the first move to switch to property taxes, but high property taxes are onerous on “cash poor” people whose only asset may be their land. They would also have to establish special rates for farm land, or you would kill the agricultural sector. Then again, I always thought a couple of rows of sugarcane would look good in my front yard.
I doubt any help will come through the Legis. Whatever Bobby wants, Bobby gets! Maybe they will surprise me!!
Jindal doesn’t care about this state. His only concern Is building his resume for national political office.
Why does this surprise anyone..consider who his campaign contributers are also consider his heritage…India .. well known for its compassion for the less fortunate…this will really hurt the elderly on fixed incomes even if food is exempted..the increase cost of, for example, carpenter and plumbing tools will be passed along to consumers regardless of their income levels ..Rent will increase along with other indirect costs…currently state income tax is deductible on itemized federal tax returns so federal filers could well see their federal income tax increase…time for piyush to retire to private life
It is anticipated that food and prescription drugs will be exempted from the proposed sales tax.
True Tomas, but we may be surprised at what they *will* start charging sales tax on.
Way to geaux Bobby, redistribute the wealth!
seems like doing away with state income tax will allow him to divest the state of more Dept of Revenue employees!
Immoral, unethical, unworkable, and insane! Looks like Puyush has about the same legislative program as last year. He figures that those low income voters belong to Landrieu anyway!
The math doesn’t add up.
Half the revenue is from income/corp tax. The sales tax would have to double in order to be revenue neutral.
So, that’s 4%, before rebates and exclusions. Notice they want to exempt legal services. (lol)
hello again, hello, this is not a trial balloon, it is all part of the GOP communication plan….promote fear, ignorance, and prejudice. Sales tax hurt the poor…read Mein Kamp ? and Toland’s Adoph Hitler..the poor, sick,and disabled, well they cost too much, fire up the ovens….or at least arm the populace with AR 15’s to protect us from the “tyranny of government” which means raising taxes to help the poor and make dam sure those taxes go to insurance companies and/or welfare corporate america, not to cheaper government programs….ron thompson
It is obvious that Jindal is the Republican candidate for the U S Senate seat currently being held by Mary Landrieu. The crunchers in the Republican Senatorial Campaign Committee have Pyush where they want him. Their carrot is the Presidency. They know that Jindal will never come close to getting the nomination and so a Jindal victory over Landrieu would mean a long time hold of the second Louisiana Senate seat. Jindal believes that he can run for the Presidency with his present assets, but the intervention of the open seat will force his candidacy.
A Jindal loss to Landrieu could be the sea change in our politics which Louisiana desperately needs
Has anyone seen any polling on this possible matchup? Challenger and incumbent female Senatorial candidates fared well in November. I think that Mary Landrieu can hold her seat against Jindal.
Regarding lil Booby’s Prez ambitions, I was never so happy as to see some of the talking heads on one show put lil Booby into the “2nd or 3rd tier” of Presidential wannabes. Let’s hope he stays there.
Good article and great comments. These and the 80+ comments on the ADVOCATE website clearly demonstrate the extent to which most people understand the ramifications of this issue. The proposal is literally shocking.
why? Texas is already doing this and Wisconsin is soon to follow
If you’re very wealthy, you have a high income, and you almost certainly don’t spend it all. If you’re very poor, you have low income, and you have to spend it all just to make ends meet.
Under the current tax structure, the wealthy are taxed on their large incomes, but the poor aren’t taxed on their paltry incomes. For example, someone who makes a million Dollars, and who spends half of it, is taxed on the million Dollars, but the person who makes $15,000 isn’t taxed because they’re too poor.
Under Jindal’s new tax plan, the wealthy person would see their taxable income drop by half because they would only be taxed on the fraction they spend, but the poor person would have their entire incomes moved into the taxable status because they have to spend every cent.
It’s a devilishly clever scheme. Kudos to the Indian Wunderkind!
A quote from this piece:
Hell, we only have one and that’s one too many to deal with here.
Tres funny, Fredster.
I just heard another interesting point about this tax. It doesn’t just hit the poor more heavily, it also hits retirees more heavily.
Retirees have already been hit heavily with income taxes. If they switch from getting revenues from income to sales taxes, retirees will now also get hit heavily by the higher sales taxes. It’s a double whammy!
But nobody ever accused Jindal of being compassionate to the elderly, huh?