NEW ORLEANS - Governor Bobby Jindal said his plan to eliminate the state income tax will give Louisiana an economic shot in the arm. But not everyone agrees, including Louisiana Treasurer John Kennedy.
The plan will terminate personal and corporate income taxes in a "revenue neutral way," which means sales taxes would be raised to make up for the loss in income taxes.
According to Jindal, economic development occurs in states without income taxes. For example, people and companies are more likely to move to those areas.
In order to not have an impact on the low income population, sales tax exemptions for food, medicine and utilities would stay in place, Jindal said.
The governor wants to talk to every lawmaker about the proposal before the next legislative session in April..
Kennedy said the idea, although interesting, deserves a lot of debate. He has raised a number of questions.
The state income tax brings in nearly $2.9 billion to the state treasury a year. State sales taxes are currently at four percent, which raises about $2.6 billion. Kennedy questions whether raising the state sales tax percentage from four to seven would make up for the loss.
Kennedy also wants to look at whether residents will spend less due to a sales tax increase. He wants to look into the effect on local governments.