Consequences of Jindal Tax Swap

by CB Forgotston
by CB Forgotston

One half of Bobby Jindal’s tax swap plan remains amorphous.
That half is from where the revenues will come to make up for those lost by repealing the state personal income tax, plus the corporate income and franchise taxes.
One of the few specifics for additional revenues that Team Jindal has mentioned is imposing state sales taxes on services.
When asked what services will be taxed, the only example from Team Jindal is “landscaping.”

Money grows on trees?
Money grows on trees?

Collecting taxes
Sales taxes are paid by the consumer, but collected by the vendor (of goods or services) who must remit them monthly or quarterly to the state.
Consider the neighbor’s child who makes his spending money in the summer cutting yards in the neighborhood. The child will now be required to fill-out forms and remit the sales tax money to the state.
Perhaps it will be a good learning experience.   Or perhaps their parents will help with the forms.
The next time you go to your barber, hair stylist or nail salon ask the proprietor what they think about expanding into the state tax collection business.

Services not taxed
The only services that Team Jindal has said that WOULD NOT be taxed are legal and accounting.
That makes perfect sense, politically.  Taxing services will require a 2/3’s vote of the lege and the legislation must start in the House of Representatives
The chairman of the House Ways and Means Committee (the tax-writing committee) is a CPA.  The president of the Senate has an accounting business and half the leges are lawyers.

Someone has to pay for services...
Someone has to pay for services…

Other services to be taxed
This brings us to other possibilities for taxing services.
I’ve heard from several physicians who like repealing the income tax and replacing it with sales taxes.  Obviously, they have no problem with collecting sales taxes on their services.
However, taxing medical services have consequences beyond the docs themselves.  It will mean a rise in our healthcare insurance premiums.
The increase, of course, would be on top of the premium increase from the implementation of Obamacare.
Anyone have a problem with that?

The unknown
These are real issues we should think about as we look into the great unknown of the other half of the Jindal tax swap.

C.B.