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Bobby Jindal Scraps Plan To Eliminate State Income Tax After Outcry

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Lousiana Gov. Bobby Jindal (R) scrapped a plan Monday that would have replaced the state's income and corporate tax with a higher sales tax and an array of other fees.

"I realize that some of you think I haven't been listening. But you'll be surprised to learn I have been," Jindal said in a speech to legislators. "And here is what I've heard from you and from the people of Louisiana -- 'yes, we do want to get rid of the income tax, but governor you're moving too fast and we aren't sure that your plan is the best way to do it.'"

He added that he is going to "park" the tax plan.

Jindal's about-face on his signature plan is a huge blow for one of the Republican party's top 2016 contenders. It is also a recognition on Jindal's part that the plan hurt him politically.

Jindal, reelected in 2011 with two-thirds of the vote, saw his approval rating slump to 38 percent -- worse than President Barack Obama's numbers in the state -- after the introduction of the plan in January 2013.

The plan increased sales taxes from 4 percent to 5.88 percent and cigarette taxes from 36 cents a pack to $1.41. It also introduced an array of new taxes on business services.

Business groups said it would shift $500 million in new taxes over to them, while about 300 clergy signed a letter opposing it because it raised sales taxes, hitting the poor who tend to spend more of the money they earn.

Jindal's plan also would have been extremely regressive. The Institution for Taxation and Economic Policy analyzed the plan and found that it would raise taxes on the bottom 80 percent of Louisiana residents. The lowest 20 percent of residents would see the largest increase in taxes, and the top 1 percent would have gotten the largest tax cut. The analysis did not include a proposed rebate for low-income people, but the group said that the deficit neutrality of the plan would likely mean higher taxes on middle-class filers anyway.

Jindal said in his speech Monday that he wasn't giving up on eliminating the state's income tax, currently maxing out at 6 percent.

"And I recognize that in this instance I need to be the one who gives so that we can have the chance to achieve success," he said. "But I'm not going to pout, I'm not going to take my ball and go home."

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