Economists: Don't eliminate the state income tax

The Louisiana Budget Project - partner with LFT in Better Choices for a Better Louisiana - today cited a Nola.com editorial in which economists from three universities say it would be a mistake to eliminate Louisiana's income tax:

Economists from LSU, UNO and Tulane say eliminating the state's income tax "is simply not good public policy. It is irresponsible." Co-authoring a Nola.com editorial, Jim Richardson of LSU, Tim Ryan of UNO and Steven Sheffrin questioned the financial and economic wisdom of Gov. Jindal's claim that the state should eliminate the personal income tax irrespective of revenue offsets or expenditure cuts. The economists noted cutting the income tax likely won't create new jobs or improve Louisiana's business climate rankings in a meaningful way. They said the state's tax burden is already the second lowest in the nation, and any future attempts to raise revenues for public services would fall on businesses. The economists concluded by reminding readers Louisiana is currently in a structural deficit - where expenditures are greater than receipts - and eliminating income taxes, which supports almost 25 percent of the state budget, will make that deficit worse.

Louisiana's current budget deficit is $1.3 billion, and Jindal's attempt to close the gap by cutting budgets for public services drew a second day of public outcry during the House Appropriations Committee meeting on Wednesday. Among other concerns, lawmakers received warnings that budget cuts could cause rural hospitals, domestic violence shelters and food banks to close. Even the Louisiana Nursing Home Association criticized the governor's proposal, saying it would take $183 million out of a trust fund established to help pay nursing homes to care for Medicaid patients