As the youngest member of the Louisiana House, Stephen Ortego, D-Carencro, still has a one revealing trait of a newbie: He reads the material they send him.
Unhappily for Gov. Bobby Jindal’s tax plan, the material included an extensive discussion from the Department of Economic Development on Louisiana’s “low tax advantage” in attracting new businesses.
That’s as in, the advantage we have before Jindal tries to make Louisiana more competitive with a new tax code.
Ortego’s view, at the Press Club of Baton Rouge recently, was that it’s difficult to improve on what a national group, The Tax Foundation, called the second-most business-friendly environment.
“Now all of a sudden it’s become a problem?” Ortego said.
His question is just one of many that will fuel skepticism about Jindal’s tax proposals, which appear likely to center on a tax swap that raises sales taxes on consumers and perhaps also some businesses, in exchange for elimination of corporate and personal income taxes.
For Ortego and others in the Legislature, that might not be popular. “We’re putting (government costs) on the backs of people who are trying to pull themselves up,” Ortego said.
He is not alone in his skepticism, although he and the following week’s Press Club speaker, Barry Erwin of the Council for a Better Louisiana, also noted what is a foundational problem with such a radical tax plan.
“We don’t have a fundamentally flawed tax structure,” Erwin said.
While both voiced some skepticism about the tax ideas floated — but not yet detailed — from the governor’s office, the idea that changes might be made was not at all rejected by either speaker.
Ortego said simplifying the tax code could enjoy widespread support, and Erwin noted that within the tax code there is room for repealing some deductions and lowering rates, all without costing the state any net revenue.
Erwin also noted something that we agree with strongly, and that is the issue of whether a system based on sales taxes will provide the revenue needed for future costs.
A state that has seen deep reductions in support for higher education, for example, is not one with a strong tax system. A state that balances its budget using one-time money and erratic borrowings from various funds, because there isn’t enough cash in the general fund, is not a state with a stable tax system.
And those issues are chronic problems since Jindal has taken office. Can the substitution of a slow-growing tax source like sales taxes for faster-growing income taxes provide a way out of this maze?
We’re skeptical, too, and want to see solid proof that such a swap is a good idea.