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Dan Fagan: Chasing business away is Louisiana’s real motto

March 9, 2019
By Dan Fagan
Originally Posted on The Advocate

There’s a myth that big business has disproportionate influence with government. Not in Louisiana.

Leaders in state government and many parishes and municipalities are increasingly setting their sights on Louisiana’s job creators. Louisiana led the nation recently in increasing the percent of state and local taxes on business. We are the only state in the nation to increase taxes on business in one year by a double-digit margin.

State and local governments in Louisiana increased taxes on businesses 12.5 percent between fiscal year 2016 to fiscal year 2017. That’s more than double the percentage increase during that time compared to any other state. This is according to a report by the London firm, Ernst & Young.

The 12.5 percent increase in taxes on Louisiana businesses is six times higher than the national average.

Compare the increase to our neighbor, Mississippi, where state and local governments combined, lowered taxes on businesses by a half a percent. Thirty states and their local governments lowered taxes on businesses from fiscal year 2016 to fiscal year 2017 while Louisiana implemented a double-digit increase.

Taxes deter investment. They also make us less competitive for new investment with our neighbors.

Ernst & Young also reports corporate income tax collections increased in Louisiana 70 percent from FY16 to FY17 due in part to an expansion of the number of companies subject to the tax.

According to the report, Louisiana now collects more than $10 billion each year from businesses for state and local government.

The report found state and local governments in Louisiana collect from businesses on many levels: property taxes, sales taxes, excise taxes, corporate income taxes, unemployment insurance taxes, individual income tax on business income, license, inventory, and other taxes. That’s billions each year that could have been used as investment dollars to create jobs but instead falls into the hands of government where money is far less valuable. It’s no secret the value of a dollar shrinks drastically once in the government sector where waste is more than prevalent.

“Income taxes, franchise taxes, sales taxes, and property taxes, no element of the Louisiana business tax code has been left untouched since 2015 in an effort to boost collections. And still, the tax code is arguably the most complicated it has ever been,” said Camille Conaway, senior vice president of the Louisiana Association of Business and Industry.

LABI reports that since Gov. John Bel Edwards, a Democrat, took office in January 2016, he’s signed more than two dozen new laws or executive orders impacting taxes paid by small and large Louisiana companies. LABI claims taxes on companies have gone up more than $3 billion.

“Louisiana’s unemployment rate, economy and workforce participation levels, unfortunately, lag the rest of the nation, and the additional $3 billion in state taxes over three years has definitely been a contributing factor,” said LABI President Stephen Waguespack. “Our elected leaders should stop relying on increased government taxes, spending, mandates and lawsuits as the best way to provide improved economic opportunities for our people.”

In Louisiana, half of the burden of funding local and state government falls on businesses. The national average is 44 percent. Factor in Louisiana’s history of encouraging frivolous lawsuits — raising the cost of insurance for businesses — and our state seems to be doing everything it can to discourage investment.

The Washington-based Tax Foundation ranked Louisiana 44th among the states in ability to attract and retain business, 36th for its corporate tax, 32nd for its individual income tax, 50th for its sales tax and 32nd for its property tax.

Replacing our current tax-and-sue-happy governor is a start to making Louisiana more competitive. But we also need more private sector-friendly legislators, especially in the state Senate. And local governments in Louisiana should resist the temptation to disproportionately target businesses for revenues, potentially killing jobs as a result.

Some politicians have an intense distrust of the private sector. They view government, not entrepreneurship and capitalism, as the best way to create wealth and opportunity for families. We’ve been one of the poorest states for far too long. It’s time to replace politicians that go to war with our state’s job creators with leaders who encourage investment of capital.