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If done right, tobacco tax hike appropriate in Jindal plan

A year-plus and change in circumstances can make quite a difference, as Gov. Bobby Jindal appears to admit with his seeming willingness to raise taxes on tobacco. But although it’s a different situation, the basic principles that legitimize this kind of tax remain the same that he should navigate in adopting this policy.

In 2011, Jindal refused to allow any kind of hike like this or otherwise, saying it constituted a tax increase, even if dedicated to salutary purposes. He vetoed the bill that did make it through the Legislature, only to have legislators reshape it as part of a constitutional amendment, bypassing him, and successfully got the electorate (unwisely, because it junked up the Constitution with a petty revenue-raising measure and was tacked onto another unrelated measure) to amend it in.

This year, the Jindal Administration has signaled that it is willing to accept a substantial increase in this tax as part of an overall strategy to eliminate income taxes in favor of consumption taxes. While the unthinking or partisan might call this inconsistent, it is entirely consistent with the Administration’s stated objective that it will not raise taxes and that shifting the composition of the tax burden does not violate this pledge so long as the overall tax burden is forecast to be no higher.


Wasteful credit retention sabotages Jindal tax swap plan

Already the political left has the garrote out to strangle in the cradle Gov. Bobby Jindal’s audacious tax reform that eliminates income taxes in favor of sales taxes. For this to survive to maturity, those interested in the societal benefits of increased economic development must not hand the revanchists the instrument of its death.

Liberals, whose view of utopia as far as economics goes concentrates more on its use as an instrument of government power and to transfer wealth from its earners to favored constituencies than as a tool to increase wealth in the aggregate, loathe Jindal’s notion to make Louisiana state income taxation disappear. That compounds with the intent of sales taxes to make up the gap to create a revenue neutral plan, leading to indignant cries that the poorer could pay more in total taxes under this structure.

While such claims, as recently noted, are much overblown, the fact is, among the poorer who pay no net state income tax, even as a large portion will be no worse off than before, some of them will getting a smaller kickback in the form of a kind of rebate for the state Earned Income Tax Credit and still others actually will end up paying more in taxes than receive any corresponding governmental benefits. Simply put, however you define the relatively poor (one such leftist interest group studying the impact of the changes pegged those who made $12,000 or less in this category), given the very general outline of the plan heretofore discussed, in aggregate they will pay more.


Overwrought objection misunderstands benefits of change

Today the Louisiana Board of Elementary and Secondary Education will consider a package of changes designed to reduce state mandates on local districts. Applauded by the school districts themselves in general content, only one of these seems to have generated any controversy.

Among ideas such as allowing schools to set their own calendars subject to minimum instruction requirements, allowing for demonstration of proficiency in some areas without duplication of inefficient replication, and in addressing intricacies to judge more validly sustained superior performance, is dropping the requirement that high schools must have one counselor for every 450 students. The professional/interest group representing state counselors, the Louisiana School Counselors Association, lamented the idea, saying the job they do is vital and handing duties to those not credentialed as counselors or eliminating them could have a negative impact on the schools.

But note that this is not what is being proposed. The rule change simply says the state will not force districts to follow this ratio and says nothing at all about how counselors should or should not be hired and/or their duties dispersed to others not so credentialed. And also note that, in that by having that rule, there is an implicit statement that without it districts inevitably would act in a way detrimental to education according to the ethos of the rule, i.e. you have to have at least one counselor per 450 students in order to provide adequate education delivery, because of some other kind of inordinate pressure (presumably, financial) making districts do what they shouldn’t.


School reform critics display lazy, hypocritical arguments

As the Louisiana education train rumbles on, disturbing the ideological prejudices of the political left and disrupting traditional power bases, in their desperation opponents sometimes don their tinfoil hats and claim black helicopter sightings through their faith that somehow some kind of untoward influence is manifesting as a result of the world becoming something they didn’t make. Recognize that such claims simultaneously demonstrate maximal fatuousness as well as stunning moral myopia that leads to selective and unsubstantiated outrage.

For example, recently a group called StudentsFirst hailed Louisiana’s education policies as the most pro-student in the country. The group ranks highest policies that establish education choice provision and decentralized solutions for it.

Naturally, this sent the sentinels of the one-size-fits-all, government monopoly model of education provision into fits, and one complaint attempted to be used to discredit the laurels was that the group donated money to candidates running for the state’s Board of Elementary and Secondary Education. Hence, the constipated argument goes, the group goads candidates into supporting their position, and then rewards those elected by lauding them.


Jindal tax swap succeeds in fairness, wealth creation

During his second, which ended as his first successful, gubernatorial campaign, Gov. Bobby Jindal said he wanted to cut individual income taxes across the board, if not eliminate them entirely eventually. According to Jindal, that day now has arrived with his announcement of a plan involving the elimination of individual and corporate income taxation that, even with self-imposed imperfections to it as a legacy of Louisiana’s populist plague, creates a fairer and more beneficial tax system for all.

Jindal’s states that simplification of the system will produce more efficiency that will encourage investment from outside the state and more economic development within it by removing these taxes and all the exceptions to them that are disincentives to investing in productive activities. It doesn’t get any simpler than wiping out the state’s progressive income taxes and the 128 exemptions to them which (2011 statistics) comprise more than half of all revenues not collected. Or, another way of thinking about this is that already about half of all income tax revenues are forgone through exemptions; why not just go all the way and let go of the other half?

But Jindal is not counting on the additional economic growth alone to offset loss of state revenues. He also maintains there will be an increase of sales taxes, in a range suggested between 1.6 to 3 percent additional to the state’s combined 4 percent rate. That basic rate is unremarkable – it ranks 38th among the states – but when the local rate gets thrown in, which has the highest weighted average of all the states at 4.85 percent – this makes the current overall aggregate rate the country’s third-highest and it easily would become the highest with the predicted addition.