A blue-ribbon panel is planning to issue a stinging denunciation of Louisiana’s tax system on Thursday, when it meets to approve a final report that follows nearly a year of study.
Louisiana’s tax system needs wholesale changes that will result in lower tax rates and fewer tax breaks, reports The Task Force on Structural Changes in Budget and Tax Policy.
“A failure to act is not an option,” declares a draft version of the report up for approval on Thursday.
That sounds serious. Rhetorically it is correct. Louisiana's tax system is loaded with special privileges for the wealthy and the well connected it asks the poor to pay for both through direct taxation and annual cuts to services.
Most of the report, though, focuses on problems with the tax system that have contributed to the budget problems that began under Jindal, who in 2008 inherited a $1 billion budget surplus from Gov. Kathleen Blanco.But the recommendations in the report, at least what I've read of them so far, aren't actually very impressive. The key element is a proposal to spread the pain of a one cent sales tax to currently exempted items while simultaneously lowering the rate.That's not going to go very far toward fixing the state's bottom line let alone begin to remedy the essential fairness problem.
Lawmakers under Jindal repeatedly chipped away at the state’s ability to raise revenue, in the name of promoting jobs and investment.
In 2008, the state awarded 51 cents in sales tax breaks for every $1 it collected in sales taxes, the study panel found. In 2015, the state gave away $1.18 in sales tax breaks for every $1 it collected in sales taxes.
In 2008, the state awarded $1.08 in corporate income tax breaks for every $1 in corporate taxes it collected. In 2015, the state awarded $2.72 in corporate income tax breaks for every $1 in corporate taxes it collected.
The Legislature is about to be called (reluctantly dragged) into special session in order to work on these issues. If the baseline for negotiations is set by the weak recommendations of the task force, don't expect a lot of positive results.