Federal tax reform is moving slowly, but several states are taking a lead on tax reform. One example is Louisiana where the Governor, Bobbie Jindal, is seeking comprehensive tax reform. He wants to eliminate income tax entirely and make up for the lost revenue by increasing sales tax rates and broadening the sales tax base. In Ohio, Governor Kasich has plans to cut the state’s income tax rates, but he is not seeking a full repeal of income tax. Governor Kasich would also lower Ohio’s sales tax rate but he would increase the regional sales tax, including things liked legal service, accounting services, tax preparation and entertainment. Governor Mike Pence of Indiana is promoting a similar plan in his state.

On the federal level, the idea of a consumption tax has very little movement in Congress. As far as a tax overhaul, the Democrats and Republicans fundamentally disagree about how the income tax system should be revised so don’t look for any big changes. As you might expect, the Democrats are interested in increasing the revenue and the Republicans want to decrease the spending.

It’s interesting that both sides agree a lower US corporate tax rate would help American firms compete abroad.