BILL MINOR: Jindal backs tax ‘swap’

By Bill Minor

How would you like to pay a state sales tax to get your haircut? Well, pretty soon if you’re somewhere in neighboring Louisiana and need to get your locks sheared, be prepared to see a sales tax added to your bill.
That’s going to happen if Gov. Bobby Jindal gets his celebrated “tax swap” passed by the state Legislature when it meets in May.
Jindal is one of a pack of Republican governors planning to abolish their individual and corporate income taxes purportedly to stimulate economic development. To offset the income loss, Jindal, et al propose to raise the sales tax and eliminate dozens of exemptions from the sales levy, one of them haircuts.
This corporate tax cut phobia as an industry lure has amazingly picked up steam in Red states. Remember our Republican governor Phil Bryant has been boasting he wants Mississippi to be “business-friendly” in the tax-cutting department. So there’s good reason to believe Bryant could be caught up in the tax-swap scheme.
Jindal, the swarthy 41-year-old Louisiana governor, has made no secret of the fact he is ambitious to play on a national stage in Republican politics. He rolled out his tax swap idea two weeks ago for public comment and boy oh boy, it came back – fast and furious. More than 250 clergy from religious groups statewide quickly pounced on Jindal’s proposal, charging that his analysis that its impact would not be heavily borne by low income households was badly flawed and contrary to his claim was not revenue neutral. James Gill, the witty columnist for The Times-Picayune, branded Jindal’s plan “A Tax Swap only the rich could love.”
Even Jindal’s own administration fiscal adviser, the paper observed “acknowledges that many businesses will pay more under the proposal.” Fundamentally, the tax swap would hike Louisiana’s sales tax rate from 4 percent to 5.88 percent, a 47 percent hike. While he would eliminate 76 exemptions from the existing rate, the proposal would keep the state’s longtime exemption for groceries, a traditional bone of contention in Mississippi’s own 7 percent sales tax rate. For historical purposes it should be noted that Mississippi was the birthplace of a statewide gross sales tax on goods back in 1932 when progressive Gov. Mike Conner pushed through a 2 percent sales levy, against angry protests by retail establishments. The Conner sales tax is credited with saving Mississippi from bankruptcy in the depths of the Great Depression.
Louisiana’s top income personal income tax rate is 7 percent and the corporate rate slightly higher. Mississippi’s top income tax rate for both individuals and corporations is 5 percent, where it has remained for three decades. No serious legislative attempt to hike the tax rate has been mounted in years, mostly because of the powerful manufacturing and business lobbies up at the state Capitol. Thus, Mississippi’s regressive sales tax (including groceries) is the state’s biggest revenue source with low income households picking up most of the tab. Oh yes, Jindal adds one sweetener to his tax swap to make it appear revenue neutral. He would stick $1.05 per pack on cigarettes. You can already smell the tobacco smoke blowing over this way, can’t you?

Syndicated columnist BILL MINOR has covered Mississippi politics since 1947. Contact him through Ed Inman at edinman@earthlink.net.