Bobby Jindal’s Louisiana is a Cautionary Tale for the Nation

While Louisiana Governor Bobby Jindal has yet to lay out a specific tax plan in the run up to his presidential campaign announcement, he has fought to reduce taxes for the wealthy and corporations at the expense of everyone else. He outlined his vision in his 2013 plan that sought to eliminate the state’s income tax and replace it with revenue from an expanded sales tax, a reform that would dramatically cut taxes for the wealthy while increasing them for at the expense of low- and middle-income people.

Record as Governor of Louisiana

Just a few months into his first term in 2008, Gov. Jindal signed into law the largest tax cut package in Louisiana history. At the time, the state had a nearly $1 billion surplus.  But this additional revenue quickly deteriorated due to the tax cut and the state’s failure to rein in ever-growing tax expenditures, such as the state’s expensive and wasteful film tax credit program. By 2015, the state faced a budget gap of $1.6 billion, even after years of harsh budget cuts across the state and the depletion of the state’s rainy day funds.

Despite the collapse of the state’s fiscal situation, Gov. Jindal stuck to Grover Norquist’s no-tax pledge, which requires politicians to never raise a penny in new tax revenue. The spending cuts that would have been needed to close the state’s 2015 budget gap, however, were so large that legislators insisted that raising tax revenue was necessary. Given his national ambitions, Gov. Jindal craftily structured his response so that he could increase tax revenues without technically violating the no-tax-pledge popular among many primary voters.

How can a governor raise taxes without violating the no-tax pledge? Gov. Jindal’s created a Rube Goldberg-like budget gimmick. Gov. Jindal passed a massive increase in college fees, which he then exactly offset with a new tax credit, resulting in no actual increase in cost for students. Because college “fee” increases do not technically count as a “tax” under Norquist’s formula, Gov. Jindal could claim that the tax credit half of his plan was a substantial new tax cut. Gov. Jindal could then sign an increase in actual taxes (including cigarette taxes and other levies) without violating the pledge under the dubious claim that the “tax” portion of this package was revenue-neutral. The tax increase piece of the package includes a substantial increase in the state’s cigarette tax, an annual cap of $180 million on the film tax credit and a series of smaller temporary revenue measures.

Putting aside Gov. Jindal’s budget shenanigans, the governor also has a history of trying to make Louisiana’s already regressive tax system even more so. In 2013, Gov. Jindal pushed to replace the state’s personal and corporate income taxes with an expanded sales tax. According to an analysis by the Institute on Taxation and Economic Policy (ITEP), the governor’s plan would have significantly increased taxes on the bottom 80 percent of Louisianans, while at the same time giving the top 1 percent of Louisianans an average tax break of $25,423 annually. Fortunately, Gov. Jindal’s plan quickly collapsed as the data on the unfairness of the plan spread throughout the state.

Record on Federal Tax Issues

Gov. Jindal’s support for deficit-inducing tax cuts for the rich on the state level mirrors his support for such policies at the federal level. During his campaign for Congress in 2004, Gov. Jindal advocated for making the Bush tax cuts permanent. As a member of Congress, Gov. Jindal voted for Bush’s extension of a preferential tax rate on capital gains and dividend income and for a permanent repeal of the estate tax, two of the most regressive aspects of the Bush tax cut package.

The closest that Gov. Jindal has come so far to laying out his vision for federal tax reform overall came in 2012 when he voiced his support for former Texas Gov. Rick Perry’s flat tax plan, which would have blown a $10.5 trillion hole in the budget over ten years and provided the richest one percent of taxpayers an average annual tax cut of over $272,000.

While Gov. Jindal has not yet laid out a specific tax reform plan as part of his newly launched presidential campaign, he has clearly demonstrated his support for regressive and fiscally imprudent tax cuts at the state and federal level.