They don’t all think we’re stupid, so let’s talk this morning about someone who is smart and respects the people of his state. That’s Louisiana Governor Bobby Jindal. Governor Jindal is proposing to eliminate all personal and corporate income taxes in Louisiana, and go to a system that depends entirely on the state sales tax.
Smart man, this Bobby Jindal!
He understands that in a state that attracts a healthy number of tourists and other visitors every year, the sales tax can be an economically smart way to raise revenue for state government because you’re spreading the tax burden between your own people and those who are visiting from other states.
Sales taxes have an advantage over income taxes because they are entirely voluntary. You decide what you’re going to buy, and you decide how much you’re going to spend, so you’re determining your own tax burden. That’s why advocates of a national consumption tax refer to it as the FairTax – since nothing could be more fair than a tax you freely choose to pay.
For Louisiana, this will mean no disincentive to earn or to produce – well, except those imposed by Washington, which are obviously significant. But at least Louisiana will give itself an advantage compared with other states because it doesn’t add another disincentive on top of the ones imposed by Obama. It will give Louisiana a more positive environment in which to start a business, move a business and operate a business. It will reward people who work hard and earn a lot of money, and especially those who save and invest.
The Louisiana Legislature should pass Governor Jindal’s proposal, and Congress might want to pay a little attention as well.
