Jindal tax plan's effect on small businesses - KPLC 7 News, Lake Charles, Louisiana

Small business owner concerned about Jindal tax plan

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(Source: WAFB-TV) (Source: WAFB-TV)
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LAKE CHARLES, LA (KPLC) -

Governor Bobby Jindal's proposed tax reform plan will eliminate personal and business income taxes in favor of higher sales taxes. It's a move that Charlie Hinchee, the owner of a local art gallery in downtown Lake Charles, says would kill small businesses.  

"I think it will kill off small business," Hinchee said. "I mean, it's not going to affect Wal-Mart or Kmart or any of the large retailers that are out there."

That's because, according to Hinchee, the profit margin for a small business is about 1.5 percent; much smaller than that of a larger or chain business. Hinchee said any loss to that would be detrimental to small businesses like his.

"Large businesses have many profit centers that they can go on and small businesses don't have that," said Hinchee. "I mean, I've got two."

Still, Hinchee believes the proposed plan doesn't address the main issue plaguing state government. 

"It doesn't address the real problem which is the budget shortfalls which we keep having year out," he said. 

The proposed plan would also increase the sales tax nearly 2 percent to 5.88 percent. Hinchee said that in itself will drive customers away from small businesses and toward online sales and border sales. 

"A store like this, you're talking about thousands of dollars, not millions of dollars and that could be the difference between staying open and not," he said.

The proposed plan would go into effect on Jan. 1, 2014.  But Hinchee said a plan like this would only do more harm for the state than good.

"You don't address the debt problem then all you are doing is stalling what you should be doing now to a later date and it won't work," he said.

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