Our Views: Wall Street plan hurts Main Street

In a series of high-profile speeches, Gov. Bobby Jindal has advised his struggling Republican Party to embrace the interests of Main Street, not Wall Street.

For Louisiana, Jindal wants the reverse.

The governor’s new tax plan could hardly be more precisely targeted to benefit big interests of Wall Street companies, cutting corporate income and franchise taxes. Its future costs in sales tax increases would lay the revenue burden on struggling families and small businesses at the cash register.

The larger part of the plan, elimination of the state personal income tax, benefits individuals and businesses. But to make up the billions in lost revenue, Jindal requires both an increase in the general sales tax and a broader collection of sales taxes on business activity not now taxed.

This is not “revenue-neutral,” to borrow the governor’s buzzword, for the largest multinational corporations. The corporate income and franchise taxes are paid, basically, by those very large companies. They get the tax breaks, and whatever trickles down to Main Street is considered economic development.

To the extent that those of us who are prosperous pay more in state income taxes today, the Jindal plan would offer some tax relief. But in tune with the Wall Street policy, those at the top of the income ladder would pay the same sales tax rates as those at the bottom.

The details of all this remain vague, despite months of discussions. No bills were proffered by the governor to legislators last week, and it’s not clear when actual bills will be available.

Hopefully, that will be well before the April 8 legislative session. Specific business interests have legitimate concerns that should be more precisely addressed.

Still, the broad outline presented by the governor is a troubling one.

The rationale, a thin one, for this radical revision of state tax policy is that Louisiana’s policies are rated poorly by the Tax Foundation. That is a credible national research organization, but one that favors consumption taxes, such as sales taxes, over income taxes nationally.

To select a pro-sales tax organization and then declare that our system is deficient in its ratings is a circular argument. For every organization favoring consumption taxes, right or left, there are others just as credible that would argue that Louisiana’s current overreliance on sales taxes and volatile oil and gas revenues is inefficient and prone to crashes.

Balance might well be better: The majority of states rely on a buffet of taxes. Texas, which does not have a personal income tax, has a panoply of business taxes and high property taxes that make up the difference — not to mention some taxes on oil and gas interests that Louisiana does not have.

Louisiana’s state and local tax burden is one of the lowest in the country, according to the Tax Foundation. We are sure that the tax code can be improved, but these amputations of Wall Street’s tax burdens seem a major surgery.

We believe tax policy should take into consideration the struggles of striving families that are seeking a leg up in society.

The tax system should adequately fund the services they need: Under Jindal, their routes to self-improvement have become harder, as tuition has risen at technical schools and community colleges. Resources for public education have been diverted to private schools. Medical care is expensive. Adding to their taxes on everyday purchases is another way that makes it more difficult for families at the lower end of the scale financially able to improve themselves.

To reduce the taxes for the biggest by increasing the percentage of income that struggling families pay out at the cash register shows a disregard for those who want to rise, and an excessive regard for the pocketbooks of those who have already made it.

Nothing could be further from the spirit of Jindal’s national utterances.