New La. tax plan (1 Viewer)

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State sales taxes would be charged on a new list of services not currently taxed, like haircuts, landscaping, cable TV, pet grooming, tanning salon visits, agricultural services and data services.
A look at Gov. Jindal's tax rewrite proposals - WAFB 9 News Baton Rouge, Louisiana News, Weather, Sports

After 5 years of incorrect budget figures, do you trust the numbers? The plan as released to the legislators today was 1 page long. I guess financing another 2% on a car sale wouldn't reduce new car sales... That's only around 800$ at 4-6% for 60-72 months on a 40K vehicle.
 

efil4stnias

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A look at Gov. Jindal's tax rewrite proposals - WAFB 9 News Baton Rouge, Louisiana News, Weather, Sports

After 5 years of incorrect budget figures, do you trust the numbers? The plan as released to the legislators today was 1 page long. I guess financing another 2% on a car sale wouldn't reduce new car sales... That's only around 800$ at 4-6% for 60-72 months on a 40K vehicle.
Thats just it...i havent seen the "numbers"- how will raising sales tax 1.8 percent offset the State revenue generated by income tax?
 

BHM

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Thats just it...i havent seen the "numbers"- how will raising sales tax 1.8 percent offset the State revenue generated by income tax?

Income tax generated 3.1 billion. Sales tax generated 4.3 billion which means we had about 110 billion in sales on taxable items.

110 billion times the additional 1.88% will bring in just over 2 billion. Add to that the new taxes on things such as hair cuts, nails polished and other services, it should be easy to get back that 3.1 billion lost from income taxes.

Government Revenue Details: Louisiana State Local for 2013 - Charts



I believe he will have some components to help the elderly and poor. Just for a fyi, if a family on fixed income spends $1,000 a month on taxable items, they would see an increase of only $18.80. Maybe a little more depending on how much of that 1,000 would be spent on newly taxed services.
 

V Chip

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Interesting that most of the new items being taxed are things everyone gets (or things that affect people across the income spectrum) and most of the things remaining exempt are things that are generally concentrated in the higher income bracket.

Newly taxed:
haircuts, landscaping, cable TV, pet grooming, tanning salon visits, agricultural services and data services

Exempt:
health care, education, construction, real estate, financial services, advertising purchases, legal services, oil and gas services and funerals.

Expanded taxes: cigarettes, other tax breaks eliminated.

Expanding government: new commission created to oversee the Sales Tax collections.

I really dislike the plan, and Jindal has shown through his past proposals and initiatives that he wildly underestimates the effects of his plans and policies, so I don't agree that it's going to remain evenue neutral and will likely result in more shortfall and thus present him with more opportunities to cut things he wants to cut anyway.

But if they did do the plan, the rebate should be based on actual gross income, not AGI. We already have seen that AGI can be affected by other tax codes and thus someone making hundreds of thousands can show AGI of nearly nothing if they have the right breaks and such, and those people should NOT be getting sales tax rebates, and they should not exempt things preferred by the well-to-do and should in fact include sales on all items such as investments, services, and real estate.
 

JimEverett

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A tax on tanning salon visits?

Will we see a rehash of the 2009-2010 arguments?
 

efil4stnias

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Income tax generated 3.1 billion. Sales tax generated 4.3 billion which means we had about 110 billion in sales on taxable items.

110 billion times the additional 1.88% will bring in just over 2 billion. Add to that the new taxes on things such as hair cuts, nails polished and other services, it should be easy to get back that 3.1 billion lost from income taxes.

Government Revenue Details: Louisiana State Local for 2013 - Charts



I believe he will have some components to help the elderly and poor. Just for a fyi, if a family on fixed income spends $1,000 a month on taxable items, they would see an increase of only $18.80. Maybe a little more depending on how much of that 1,000 would be spent on newly taxed services.
A majority of those folks dont even report. Nail salons are notorious for under-reporting income. I would imagine that isnt going to change.

I dont see how this will work. You say it "should" be easy to get to $3.1b ....but thats in theory as it stands. Heck, i would be for a 3-6 month trial period to test the waters...see if it would truly hold up. But a complete swap to this method will not be good if it doesnt work properly.
 

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A majority of those folks dont even report. Nail salons are notorious for under-reporting income. I would imagine that isnt going to change.

I dont see how this will work. You say it "should" be easy to get to $3.1b ....but thats in theory as it stands. Heck, i would be for a 3-6 month trial period to test the waters...see if it would truly hold up. But a complete swap to this method will not be good if it doesnt work properly.
I have not read all the released details yet so I am not really convinced either way.

If nail salons are notorious for under reporting then the income tax method is no better anyway. Current sales would yield just over 2 billion. There is no guessing there. That is based on actual sales volumes. Making up the remainder is more difficult.

I would not mind seeing a trial period either but that might be hard to pull off.

Some things are real tricky. How much additional revenue are we going to get from those working for cash? We just do not know because we do not know how much cash income is out there. I say we will get very little ADDITIONAL revenue from cash workers because they are not going to be buying more stuff. What they spending is already calculated in our current sales revenue.

One issue many people complain about is the deductions and exemptions the rich people get. This would reduce some of that. You make a purchase, you pay the tax. When you walk up to the counter to buy a gallon of milk or a new lawn mower, that cash register does not know if you are rich or poor. I like that part.

Bottom line is that other states are doing it. There is a lot of history to base figures on so I am sure this is not purely a blind proposal he is putting out. Sure, some calculations might end up being lower but others maybe higher.
 

efil4stnias

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I have not read all the released details yet so I am not really convinced either way.

If nail salons are notorious for under reporting then the income tax method is no better anyway. Current sales would yield just over 2 billion. There is no guessing there. That is based on actual sales volumes. Making up the remainder is more difficult.

I would not mind seeing a trial period either but that might be hard to pull off.

Some things are real tricky. How much additional revenue are we going to get from those working for cash? We just do not know because we do not know how much cash income is out there. I say we will get very little ADDITIONAL revenue from cash workers because they are not going to be buying more stuff. What they spending is already calculated in our current sales revenue.

One issue many people complain about is the deductions and exemptions the rich people get. This would reduce some of that. You make a purchase, you pay the tax. When you walk up to the counter to buy a gallon of milk or a new lawn mower, that cash register does not know if you are rich or poor. I like that part.

Bottom line is that other states are doing it. There is a lot of history to base figures on so I am sure this is not purely a blind proposal he is putting out. Sure, some calculations might end up being lower but others maybe higher.
I get that on a very basic of level....but then what is to stop that "rich" person from drop shipping or just traveling 60 miles from SE LA to Miss to make that purchase? If sales drop at local stores, then its safe to say revenue from a purely "sales tax oriented" system will as well.

Thats what I have a problem with. Yeah, there is a section when you complete your annual State tax return for purchases made "outside of LA", but how many people put anything there?!?!?! My guess is VERY FEW.
 

TechDawg09

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We already have the highest sales tax rates in the country...

In Texas, combined state and local sales taxes rarely go above 8% (the highest rate is 8.25%). In Florida the highest rate is 7.5%. You're going to pay 10.48% in Shreveport, 11.88% in Monroe, 10.88% in New Orleans and Baton Rouge if they raise the rates.

I would probably have a net benefit from this, seeing as my state income tax rate is more than 1.8% of my total income, and I don't spend all of my income. But I have a feeling it's going to hit poorer families and retirees on social security and nontaxable retirement income (state retirement funds) pretty hard. It's immoral to make them pay more and people like me pay less.
 

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I get that on a very basic of level....but then what is to stop that "rich" person from drop shipping or just traveling 60 miles from SE LA to Miss to make that purchase? If sales drop at local stores, then its safe to say revenue from a purely "sales tax oriented" system will as well.

Thats what I have a problem with. Yeah, there is a section when you complete your annual State tax return for purchases made "outside of LA", but how many people put anything there?!?!?! My guess is VERY FEW.
Really, I'll burn > 8 dollars in gas to go to MS to make a purchase to save 2%. So I have to spend $400 before I break even. Then there's the value of my time. Vehicle purchases would be about the only thing worth the travel and I believe MS has a reciprocal agreement with LA on that. Most of the time, if people want to dodge sales tax, they just stroll over to the desk and order something.
 

efil4stnias

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Really, I'll burn > 8 dollars in gas to go to MS to make a purchase to save 2%. So I have to spend $400 before I break even. Then there's the value of my time. Vehicle purchases would be about the only thing worth the travel and I believe MS has a reciprocal agreement with LA on that. Most of the time, if people want to dodge sales tax, they just stroll over to the desk and order something.
Thats what im talking about. items that routinely are $1000 or more - lawn mowers, household items ( furniture/appliances etc ) ....

And if there is a reciprocal agreement, then yes, you possibly would see a boom in internet sales. Which is detrimental in two ways...1) State doenst get the tax revenue and 2) local businesses lose the sale.
 

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One issue many people complain about is the deductions and exemptions the rich people get. This would reduce some of that. You make a purchase, you pay the tax. When you walk up to the counter to buy a gallon of milk or a new lawn mower, that cash register does not know if you are rich or poor. I like that part.
It wouldn't reduce any of that ("that" being the rich getting deductions). Since there would be no income tax, the rich would make out like bandits on that part. This proposal just gave them a 100% deduction rate basically.

The "reduce this somewhat" isn't true even for the sales taxes, because they will spend less proportionally on taxable items than the poor/lower income, and that's WITHOUT counting the items that are tax exempt. Add in those things that are mostly purchased/used by the more well off, and this is a huge boon to the rich. It won't cut their disparities in taxes one bit and in fact makes it much worse.
 

mb504

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110 billion times the additional 1.88% will bring in just over 2 billion. Add to that the new taxes on things such as hair cuts, nails polished and other services, it should be easy to get back that 3.1 billion lost from income taxes.
Have numbers been released which back that up? I'm not saying there aren't, I am honestly curious.

The numbers you cite are budgeted numbers, not actual numbers. I think the revenue estimates have been revised downward every year that Jindal has been in office, so I take that with a grain of salt. I assume fiscal year 2013 revenue projections also included some bump for the Super Bowl which brought in some amount of spending which wouldn't exist most years.

In at least the short term, would increasing sales tax not lower the total amount spent on taxable items?

Look, this plan absolutely would save me and my family money so I won't be crying in the streets if it passes. I just don't see how the numbers add up.
 

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I get that on a very basic of level....but then what is to stop that "rich" person from drop shipping or just traveling 60 miles from SE LA to Miss to make that purchase? If sales drop at local stores, then its safe to say revenue from a purely "sales tax oriented" system will as well.

Thats what I have a problem with. Yeah, there is a section when you complete your annual State tax return for purchases made "outside of LA", but how many people put anything there?!?!?! My guess is VERY FEW.
What stops rich people from having things dropped shipped now? Do you really think a lot of rich people will drive two hours round trip to save a few bucks on sales taxes? Might be worth it for a major purchase such as a car but then you still pay the sales tax of the city you reside in.

Now if you want to get our sales tax rate more in line with Texas, then drop the $75.000 property homestead exemption and jack up the property tax rate to match Texas. Oh, but that would hurt the poor so we can not do that either.

I wonder how the poor people in Texas manage to pay property taxes?
 

dtc

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If nail salons are notorious for under reporting then the income tax method is no better anyway. Current sales would yield just over 2 billion. There is no guessing there. That is based on actual sales volumes. Making up the remainder is more difficult.
Actually, not to dis your math, but that's not really true.

Sales tax is a component of spending. You can't just add 2 or 3% to every households expenses because so many are spending exactly what they make so you have to account for it.

If you are spending 1000 per month and sales tax increases by 2%, you're going to actually spend around $980.

So, there will be 2% less collected on the $20 that poor households can't spend.

And, of course, this illustrates the regressive nature so well I won't bother to expound.

Still, your assumption "That it should be easy to ....." is probably wrong. It won't be. It will be susceptible to a whole new level of fraud and mistakes and it will create an entirely new bureaucracy from scratch or, worse yet, allow Jindal to funnel off collection to some crony.
 

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Have numbers been released which back that up? I'm not saying there aren't, I am honestly curious.
I haven't seen any hard data beyond negative analysis of the early plans. These are the claimed numbers from Jindal's plan:

 

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