It’s not dead yet.
Reading the Wall Street Journal, New York Times, Bloomberg, and pretty much every other news outlet, one would think that Governor Bobby Jindal has given up on his efforts to eliminate the Louisiana income tax. But in fact, pretty much every reporter who has written on this has the story wrong.
In his State of the State address on the first day of the 2013 session of the Louisiana legislature this week, Jindal announced that he was “parking” the tax-reform proposal that he unveiled last month, in response to opposition from the public and members of the legislature. While his comprehensive tax-code overhaul might be tabled, Jindal did not say that he is giving up on his proposal to eliminate the state income tax.
During the unveiling of his tax-reform plan last month, Governor Jindal made clear that his proposal was an opening bid and that it was not written in stone. His announcement this week confirms that he is not going to make the perfect the enemy of the good, and will work with legislators to find a way to provide income-tax relief in a manner that most lawmakers can agree on, even if it’s not exactly how he originally proposed getting there.
The ball is now in the legislature’s court, where ten separate income-tax-repeal bills have been introduced. Those bills will now be the vehicle for achieving the ultimate goal shared by Jindal and even his critics in the legislature, which is elimination of the state income tax. Legislators will now have the opportunity to decide how they would like to provide income-tax relief. Despite heavy criticism from left-wing reporters and pundits, Governor Jindal and Louisiana legislators are right to move forward with their plans to eliminate the state income tax. (So are their counterparts in Kansas and North Carolina, who are engaged in similar efforts.)
From 2001 to 2010, economic growth in the nine states with no personal income tax outperformed the national average by 25.6 percent and outperformed by 39.2 percent economic growth in the nine states with the highest income taxes. The more hospitable tax climates of no-income-tax states also draw jobs and people from high-income-tax states. Population growth over the past decade was 148.6 percent higher in no-income-tax states than in the aforementioned high-income-tax states.
The national media are dying to write a story about how Jindal’s attempt to cut the income tax failed, but that simply didn’t happen. When Treasury I, the Reagan White House’s opening bid for tax reform in 1984, wasn’t exactly what became law with the Tax Reform Act of 1986, did people claim that Reagan gave up or failed to cut the federal income tax? No. In fact, tax reform really gained traction when President Reagan empowered the House Ways and Means chairman, Dan Rostenkowski, and the Senate Finance chairman, Bob Packwood, to chart their own course to the shared goal of crafting a tax code with lower rates and a broader tax base. As Jindal remarked in his State of the State address on Monday, “Success requires give and take. And I recognize that, in this instance, I need to be the one who gives so that we can have the chance to achieve success.”
So reports of the death of Jindal’s income-tax repeal are greatly exaggerated. In fact, this strategic shift by Jindal could very well make it more likely that income-tax relief is signed into law in Louisiana this year.
— Patrick Gleason is director of state affairs at Americans for Tax Reform.