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January 11, 2013 11:17 AM The GOP Tax Increase Agenda and Those Promising Governors

By Ed Kilgore

Everybody knows Republicans would never, ever support tax increases (or at least haven’t for decades until weak-kneed RINOs allowed Barack Obama to boost income taxes on the wealthy lest they go up on the middle class as well). Yet just beneath the surface of a generation of anti-tax rhetoric has lurked a powerful desire to raise taxes on the non-wealthy in order to cut them for “job creators.” It has been implicit for years in various “flat tax” schemes or consumption tax “reform” schemes, and of course in the ill-suppressed rage over the “lucky ducky” working poor with no income tax liability.

But sometimes, and usually at the state level, the drive for a more regressive tax system that simply redistributes the tax burden down the income scale becomes explicit. That was manifested just yesterday when Louisiana Gov. Bobby Jindal proposed boosting his state’s sales tax in order to abolish income and corporate taxes altogether.

“The bottom line is that for too long, Louisiana’s workers and small businesses have suffered from having a state tax structure that is too complex and that holds back economic prosperity,” Jindal said in a statement released by his office. “It’s time to change that so people can keep more of their own money and foster an environment where businesses want to invest and create good-paying jobs.”
Jindal said the plan would be revenue-neutral and that the goal would be to keep sales taxes “as low and flat as possible.”

Well, that last part is awfully nice of him, though his interest in keeping sales tax increases low doesn’t quite match the determination to make taxes most affecting corporations and the wealthy at the especially low rate of zero.

Whatever else it means, Jindal’s tax increase gambit should help put to rest the loose and easy talk we keep hearing about Republican governors offering their party a new and moderate face. Jindal is often touted in such talk, and between his tax “ideas” and his cutting-edge school voucher program designed to shovel public dollars to conservative evangelical madrassas, his image as a pragmatic “centrist” is becoming less credible each day. It’s even less merited for another “rising star” Republican governor, South Carolina’s Nikki Haley, who expressed her interest in the same kind of tax agenda (eliminating a sales tax exemption for food to finance an abolition of corporate taxes) as Jindal when running for governor in 2010.

Indeed, who are those “pragmatic” GOP governors who are supposed to save their party from extremism? Rick Perry? Rick Scott? Scott Walker? John Kasich? Mike Pence? Sam Brownback? Paul LePage? Yes, Virginia’s Bob McDonnell has worked pretty hard to erase early impressions that he was a kooky social conservative ideologue, but his juice in the GOP is reflected by the fact that he couldn’t even impose his own lieutenant governor on his own state party as a successor. And yes, there’s always Chris Christie, who if he ever chooses to run for a Republican presidential nomination will have to burnish his Attila the Hun act to overcome the conservative hostility he created by “re-electing Barack Obama” via his kind words for the president during the Sandy disaster.

Word to the pundits who love this “Republican governors to the rescue” meme: extremism in the GOP emanates not from Washington, but from the states and the grassroots. A national Republican Party reshaped according to the designs of someone like Bobby Jindal may be smarter and slicker, but the former exorcist is no “moderate” unless the word has lost all meaning.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • ET on January 11, 2013 11:32 AM:

    For goodness sake - whatever you don't read comments on the Times Picayune article on this. At least if you don't want to hit your computer screen.

    There are wingers who believe that this will attract business to LA. I mean really, corporate/individual state income taxes are likely NOT the reason business won't move/stay in LA.

    What is sad is they don' know how negatively this likely to impact them on a day-to-day basis. All they see is all those freeloaders (those who work and those who don't) who don't pay anything will have to pay something now.

  • c u n d gulag on January 11, 2013 11:43 AM:

    "...Nikki Haley, who expressed her interest in the same kind of tax agenda (eliminating a sales tax exemption for food to finance an abolition of corporate taxes)..."

    Ok, can we at least have SOME intellectual consistency!

    If you want to eliminate the tax exemption for food for real human beings, taking away food from them, then why would the abolish corporate taxes?

    If corporations are people, as Conservatives say they believe them to be, then why wouldn't you INCREASE their taxes, instead of abolish them?

    Real live human beings need food to live, removing that exemption means that they'll be able to afford less of it - and without it for long enough periods of time, THE REAL HUMAN BEINGS DIE!

    So, if corporations are people, why wouldn't you take away food for them too?
    Money, aka: income, is food for corporations. If the go without it for too long, the corporation dies - it's just that, while people may grieve, there's no one to bury or cremate.

    So, while you want to starve the 'human beast,' you want to feed the 'corporate beaast' - with the money (food) taken away from real humans.

    Does this make any sense to anyone else out there?
    Am I missing something?
    Is there some consistence that's going over my head?

  • T2 on January 11, 2013 11:47 AM:

    GOP governors were able to use the Great Recession as an excuse to slash education and social programs due to the fact various state imposed taxes (sales, for one) dropped off the table during the Recession. But once things picked up, and tax revenues followed, they are scrambling to tell their residents that just because there is now enough money to re-fund schools and health clinics, that ain't gonna happen. Rick Perry being a fine example of this. Instead, watch these GOPer Gov's funnel the new tax money into pet projects benefitting cronies, lobbies and Big Business.

  • Bokonon on January 11, 2013 11:48 AM:

    The entire point of this "reform" would be to make taxes as onerous and painful non-progressive as possible ... and make the greatest number of people feel the pain, as often as possible. People will encounter their state government in a highly negative and onerous way all the time. Every day. Like water torture.

    As a bonus, poor people would have a direct interest in keeping taxes low, since they will get socked with big, painful sales taxes every time they buy or sell something. If this sales tax system is truly "revenue neutral", those sales taxes will be awful. And it will be a royal pain to administer (far from reducing "complexity").

    So ... Jindal is talking out of his rear end. This isn't about people "keeping more of their money" or reducing complexity. It is about building a new anti-tax constituency for the GOP while trying to further defund the government ... and making taxes as unpleasant as possible.

  • Dan Miller on January 11, 2013 11:50 AM:

    McDonnell is also on board with the "raise taxes, on the right people" plan; witness his new transportation plan, which would repeal the gas tax, not charge any sales tax on gas, and replace it with a hike in the sales tax and a $100/year fee on plug-in hybrids and other alternative-fuel vehicles.

  • Bokonon on January 11, 2013 12:23 PM:

    As Daniel Webster once said, "the power to tax is the power to destroy."

    And Governor McDonnell's proposal to place special tax levy on people who drive hybrid cars? While simultaneously eliminating Virginia's gas tax? Cheap gas for pickups but special taxes for the latte-sipping liberals in the northern part of the state? That is just a classic piece of GOP cultural warfare.

  • anonymous on January 11, 2013 12:25 PM:

    Both Niki and Bobby have discovered the best way for Indian Americans to succeed in the American politics.

    The democrats do not have a race problem, but the GOP has to put some non-white faces in the forefront to hide its color consciousness, and these two have found the optimal manner in which to exploit this desperate need that the Republicans have - convert to Christianity, and parrot the extreme agenda of the GOP without sounding that extreme, at least to the uninitiated. This assessment may itself sound quite bigoted, and I apologize, but that is the way I see it.

  • New Orleans on January 11, 2013 12:30 PM:

    Bobby Jindal is an idiot. Sales taxes in Louisiana are already about 10 percent, 11 percent in some locales.

    I'm a sales rep, so my income depends on retailers selling my products. The last thing I need is a higher sales tax driving more customers away from my dealers to out-of-state retailers who don't collect sales taxes.

  • gandalf on January 11, 2013 12:34 PM:

    The thing about evolution is that species don't always evolve in way that's beneficial for them. It would seem that there are humans that are in essence devolving to a species with lesser intelligence than there predecessors. I.E. Bobby Jindal and his ilk in the republican party.

  • Th on January 11, 2013 1:58 PM:

    I wonder if the tea party will ever realize this raises taxes on their retirement income. So much for having a Roth or SS tax exemptions. Aim at the poors and hit your foot soldiers instead.

  • Don Heichel on January 11, 2013 2:29 PM:

    For those that don't know, Corporate tax rates in ALL European Socialist Nations are lower than our Fed Corp rate.

    This kills jobs.

    Jindal's plan is one that will boost the interest of Business in that State & go far toward "promoting the general welfare" through jobs instead of the dole.

    CEO Mag (on-line) has the annual 650 CEO Survey for Best & Worst States for Biz: California has been #50 (THE WORST!) for 8 straight years & please don't read the CEO comments unless you want your ears to burn.

    This move by Jindal will FURTHER move his State up in the Survey toward #1 (Texas, notice their budget surplus WITHOUT raising taxes?) & will NOT kill jobs!

  • jjm on January 11, 2013 2:30 PM:

    So, Louisianians [sp.?]: grow your own food, if you can, and stop buying consumer goods IN LOUISIANA.

    Then see how the state fares when it cannot give tax breaks to and take bribes from corporations to come there. Even Wal Mart might pull out.

  • jack on January 11, 2013 3:11 PM:

    Republicans should argue the case for regressive taxes more openly. Obama doesn't miss a chance to sermonize about everyone paying their fair share. Everyone should mean exactly that. Folks who get the benefits of big government for nothing invariably want more of it. That has to end. And it'll change the political psychology of the country. Create more taxpayers and you'll create more voters who'll reject government.

  • Bokonon on January 11, 2013 3:35 PM:

    Don, I am a corporate guy myself, and you are correct that the US corporate taxation rate is higher than other industrialized countries. Our corporate tax code is also riddled with so many byzantine exemptions and credits that very few established companies pay that tax rate. Some of the biggest and most sophisticated corporations pay nothing at all. This complexity and lack of uniformity is bad on lots of levels, and encourages all sorts of gamesmanship. Problem is, from deep inside corporate America, I don't hear a lot of clamoring for reform (except on an abstract level - and usually tied to income tax reforms). Corporate America actually seems to like the existing situation well enough, since they have found ways to benefit from it, and a flatter and fairer system might probably cost them more.

    Now ... what we are talking about HERE are Louisiana state taxes though. Not federal taxes. And Jindal's proposal to completely junk corporate and personal income taxation, and replace all that revenue with sales taxes is just ludicrous, pie in the sky, radical stuff. There is no way that you can do that and be "revenue neutral". He knows that perfectly well. But Jindal's entire point is that he is trying to significantly defund state government and make the remaining revenue streams non-progressive and non-income based, while walling off future revenue sources.

    Killing jobs comes in all forms. And it is NOT business friendly to have a state that eliminates its revenue base, so that it can't pay for necessary functions like infrastructure or law enforcement, and that has a lousy education system, and goes around looking for operating funds under couch cushions and bake sales. Not even Texas or New Hampshire do that. What you are going to end up with is Bangladesh - not a successful first word economy.

  • Doug on January 11, 2013 3:59 PM:

    I see the trolls are out in force...
    I particularly like the idiotic idea that, since rich people spend more than poor, they'll pay more taxes! You mean just as the rich spend 35% of their income on Federal income taxes? Or using the internet? Or paying cash for something in another state, then hauling it back to Louisiana?
    Of course the one proven method of ensuring a steady increase in workers' income is the one con artists such as Jinal and Haley will never use - high marginal income tax rates on personal and corporate income. Because that would force the "job creators" to, you know, create jobs or pay the high tax rates!
    I'm good with either solution...