Taxes of all kinds come from the economy, and taxes are ultimately paid by customers of businesses, local or out-of-state.
That’s why it’s important to focus on the big picture of Louisiana’s increasingly ragged and convoluted tax code — and get some more specific ideas from this year’s candidates for governor and Legislature about how to fix it. The Louisiana Association of Business and Industry has a new report that focuses attention on the tax bills. We hope it helps to spark a discussion about how to fix things.
The report, misleadingly, aims its data in a political direction that is not likely to be helpful to a results-oriented discussion of reform. The problem is timing.
The report said Louisiana was first in the nation for the annual increase in state and local business taxes from 2016 to 2017. That reflects something of a post-recession national trend, as other states raised business taxes, but Louisiana’s was significantly higher: 12.5 percent, compared to 2 percent nationally, and 3.3 percent in Texas, our neighbor and friendly economic competitor.
But more context is needed, and that should include the catastrophic impact of former Gov. Bobby Jindal’s tax cuts, slashing of aid to colleges, reducing state payrolls first and assessing the results later. As LABI President Stephen Waguespack well knows, as a former top aide to Jindal, the Legislature — with Republican leaders in both House and Senate — had to go along with big tax increases because the last administration left the state in a budgetary crisis.
More than that, Jindal’s years left colleges less competitive, students struggling with higher tuition bills — and many business taxes reduced without a thought to the revenues lost. To say business was persecuted by the somewhat haphazard tax increases needed in 2016 and 2017 ignores that vital context.
Louisiana is business-friendly, but it also has a historic populist streak that makes our tax code less than perfect, desperately needing a big fix. Over and over again, despite the formidable influence of LABI and industrial groups in the Legislature, no coalition came together to make the far-reaching reforms needed politically possible.
Perhaps that was hostility to a Democratic governor in a Republican state, or perhaps it was just that legislators feared a backlash from voters if they raised direct taxes. Perhaps Gov. John Bel Edwards fumbled the ball a few times, even if he is an ex-quarterback of Amite High.
Prominent business voices — the Committee of 100 for Economic Development, among others — have pushed broad changes. We need them.
Going back to the economists’ view, though, the legislators have raised taxes on all of us, whether or not they called them business taxes. LABI’s view is worth quoting: “Unfortunately, most of the new tax policy has only served to further complicate and burden Louisiana businesses, as state rankings for tax competitiveness fall even lower.”
The way forward is to fix that, and simply repealing business taxes without replacing the revenues — Jindalnomics, in a word — is not the conclusion we should reach.