Starting in July, Louisianans will get some much-needed and long-promised tax relief. Unsurprisingly, just as that relief is finally within reach, politicians are threatening to hike taxes again.
So, what happens if Louisiana politicians ask taxpayers to ante up once again? A temporary sales tax hike passed in 2016 winds down at the end of next month creating a so-called “fiscal cliff.” What most Louisianans don’t realize, however, is that several tax-hike proposals under consideration in Baton Rouge would devastate our already-fragile economy, costing Louisiana up to 2,800 jobs and dropping the state’s GDP up to $190 million in the first year alone.
As expected, Gov. John Bel Edwards and some state lawmakers are now crying poverty as the expiration date of temporary sales tax hike draws near. According to them, keeping their promise of letting these taxes expire on schedule means the state can’t do its job. New research from the Pelican Institute for Public Policy shows that the tax increases and budget proposals that Edwards is pushing for would not only cost Louisianans jobs, but they would also significantly shrink Louisiana’s economy and GDP. This comes on the heels of weeks of consistently bad economic news. Just last week, a report from the federal Bureau of Economic Analysis named Louisiana’s economy the worst in the country.
Using a dynamic scoring method, which provides a much more realistic view of economic effects than the state’s current method, this new report shows that raising taxes would cost Louisiana thousands of jobs, and in many cases, shrink the state’s GDP by hundreds of millions of dollars. These are undeniable figures and give an honest look — apart from the rhetoric — of what hiking taxes right now would do to our state.
The governor and many legislators are hoping that Louisiana taxpayers will simply believe their scare tactics, trust them to know what’s best and then pay up. Before taxpayers are expected to bail out legislators from their budget problems again, any elected official pushing for more tax hikes should answer a few questions. What will lawmakers say to families across the state already struggling to find work who now will face an even more difficult economic situation?
Is it responsible to pass a tax proposal if it would cost Louisiana’s economy more than any tax revenue it would bring in? These are the questions working families of Louisiana deserve answers on, particularly as lawmakers consider writing yet another chapter in the seemingly endless series of special legislative sessions. Tax hikes obviously bring in revenue, and Louisiana’s chronic budget problems make that revenue too tempting for many politicians to pass up. Tax hikes also cost jobs, hurt our state economy, and cost families money that they often don’t have to spare.
Growing Louisiana’s economy is the only sustainable, responsible, and long-term solution to ensure that our state is operating effectively and that we are protecting and providing for those Louisianans who need our help. Raising taxes, no matter how creative the proposal or how dire the alternatives are sold to be, will simply mask the state’s true economic problems. This is politics, pure and simple. What’s missing? Creative thinking and the willingness to adopt changes that will rein in government spending instead of, yet again, turning to taxpayers for more money.
Louisianans deserve to know the truth about the effects on their wallets and their state from the budget being debated. We think taxpayers deserve the truth. This will give them the tools they need to make informed decisions, and more importantly, to see through the rhetoric.
Daniel J. Erspamer is the chief executive officer of the Pelican Institute for Public Policy, Louisiana’s free-market think tank.