Address the cause; not the symptom Monday, Mar 3 2014
Consider our burden
Friday, there was a story in the Baton Rouge paper headlined “Tax Credits cost the state $3 Billion.” ( Story here.)
Unlike the headline, tax breaks should not be viewed as costing government anything, because OUR money does not belong to the government.
As difficult as it might be to believe, most of the leges view all of OUR money as belonging to the state. They believe that they generously allow us to keep some amount of it by setting tax rates, fees, tuition and tax breaks.
Tax breaks are a symptom
The credits referred to in the above headline are only those for businesses. There is another $1.8 Billion mentioned in the story for individuals.
Tax breaks are merely a symptom of an unfair tax code.
In other words, Louisiana taxes are too high to lure businesses and individuals to Louisiana without special tax breaks.
In this instance, the annual figure of the business breaks is $600 Million.
That’s a lot of money, but it is money being left in the hands of private citizens to spend on jobs, goods and services that generate taxes for state and local government.
The newspaper story gives one the impression that if those tax breaks were simply repealed Louisiana’s chronic (since Bobby Jindal became governor) fiscal problems would be resolved. However, $600 Million represents less than 2.4% of the state spending, annually.
If an additional $600 Million was confiscated, annually, from the taxpayers who own, invest or work in businesses, it would not even offset the $800 Million in cuts made by the leges to higher education by the Jindal Administration.
Impact on the economy
While the additional confiscation of OUR money might help balance the state budget, it fails to take into consideration the overall impact on the state’s economy.
By taking an additional $600 Million, annually, from the economy, jobs will be lost, consumer and business spending will go down resulting in a reduction in state and local Sales taxes as well as reductions in Corporate and Personal Income taxes.
Speaker Chuck Kleckley has commissioned a $200,000 (our tax dollars) study of the state tax code, including breaks. Here’s recommendations for the study:
– First strip the state tax code down to the bare bones with no exemptions, exclusions or deductions. That would generate billions of dollars, annually.
– Next roll-back the tax rates on a “revenue-neutral” basis where each tax brought in no more that it does currently.
Note: “Revenue-neutral” does NOT mean “tax-neutral.” Some would pay more taxes and others would pay less, but the overall rates would be less.
– Look at how those rates compare with the other states.
Properly done (Yes, I’m still an idealist.), we could have a tax code that reduces most taxes and could make Louisiana, from a tax policy standpoint, the most attractive state in the U.S. for individuals and businesses.
As a result, the economy will grow naturally and produce the revenues necessary to provide the needed services to the citizens of Louisiana.
For years now, government expenditures have grown at a rate faster than the private sector economy. That is a disaster! We cannot afford to wait until Jindal is out of office. We must insist that our leges address the state’s fiscal problems NOW!
If you agree with me, please contact your leges now and insist that they begin addressing the state’s fiscal problems during the 2014 Regular Session.
Taxes cannot be raised during the session starting March 10, but college tuition will be increased by $88 Million.
However, state spending can be addressed. It must be reduced to a level sustainable by our state’s economy.
Additionally, we must insist that over a billion dollars in delinquent taxes are collected.
All it takes to fix the tax code is political courage.
“King of Subversive Bloggers” – James Gill
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