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Economists weigh in on governor's tax plan

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New Orleanians and economists are weighing in on the pros and cons of Governor Bobby Jindal's sweeping new tax proposals.  Though the full plan has not been revealed, groups that represent the poor say they are worried.  The plan also has plenty of supporters.

Andre Fortin was making groceries on Elysian Fields Avenue Friday, and worrying about a new plan that could raise sales taxes.

"I disagree with it," Fortin told us.  "People who don't have an income per se, like people on Social Security, it's gonna' cost them a little more."

Annie Varnado worries, too.  "Our taxes are high enough, especially the elders like me."

"Because of the fact that people at the low end spend so much of their income, any sales tax will take more percentage-wise out of their income," said UNO economist Janet Speyrer.

But for some working people, the plan may be a wash.  Betty Fortin of New Orleans said, "I pay state tax; it will balance out."

The governor also wants to do away with all corporate and personal income taxes, similar to Florida and Texas.  Some supporters of the initiative consider those states positive cases in point.

But a UNO analysis finds that, between the years 2000 and 2010, Louisiana's economy actually grew at a faster rate than both Texas and Florida, posting a 77 percent growth rate. Florida's economy grew at 53 percent during the same period; Texas grew by 67 percent. 

While the state considers raising sales taxes, it may also want to consider possible negative impacts of such a move.

"As sales taxes become higher, the Internet becomes more attractive.  Or I could see people setting up furniture stores in Picayune -- let's go to Mississippi and buy things there," said UNO economist Dub Lane.

The governor also is talking about tossing out some big corporate tax breaks.  The state's film industry has enjoyed such breaks for the last several years, and places like UNO have benefited greatly.  UNO's Film, Theatre and Communications Arts department is bursting at the seams as more and more movies are produced here, thanks to a credit that eliminates much of a film's production costs.

"I came from Los Angeles and I tell my kids, 'You stay here, this is where the work is,'" said  theatre production instructor Laura Medina.

The governor says he will work to minimize the sales tax blow on the poor and the elderly as much as possible.  Annie Varnado says her fixed income can't take too many more hits.

We also heard from the head of the Louisiana chapter of the NAACP Friday evening. Chapter president Earnest Johnson tells us his organization will watch changes in tax laws closely.

"We know sales taxes are regressive, and there's always a disproportionate impact on the poor and elderly," Johnson told us.

The discussion has begun, and will likely grow more intense.

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