If just about everybody knows the answers to the questions, why is the test of tax reform so hard?
That answer: Politics.
The big battle at the State Capitol in 2017 looks like tax reform, as the state continues to slog through unending financial crises inspired by the bad judgment of former Gov. Bobby Jindal and many members of the Legislature, who cut taxes and larded out business tax breaks over eight years without regard to the bottom line.
Today, despite the obviously partisan noise of the Louisiana GOP and grumbling from the legislators unwilling to admit their mistakes, there is a bipartisan consensus about what should happen in the April session of the Legislature.
As panels of experts, including legislators and outsiders, have suggested for years, a real overhaul of the state tax structure is needed. A fairer and more dependable system was sketched out by what is known by insiders as the HCR11 task force, created by that resolution and headed by LSU economist Jim Richardson and Revenue Secretary Kimberly Robinson.
But broadly, the same solutions have been recommended by business-friendly economists of the Tax Foundation, inspired by the Committee of 100 for Economic Development. And most of the points have been made over many years by a slew of other studies.
It's not soak-the-rich, but pay-the-bills.
Key recommendations include raising the percentage of revenue from the personal income tax to balance with that of the sales tax; extending sales tax collections to some services, as Texas and many other states have done; preparing the state's tax system for internet sales taxes, as Congress is now deliberating about.
Streamlining the collection of sales taxes and making it easier for businesses to file is also a key part of simplification.
Robinson sketched out the elements of the HCR11 plan before the Press Club of Baton Rouge, but her boss, Gov. John Bel Edwards, wryly noted in a speech before the Council for a Better Louisiana that "fair" to many people means a tax that somebody else pays.
As both Democrats also noted, a new tax system must not just be simpler and fairer, but "sufficient." So here is where politics comes in.
For some in the GOP, tax reform is not a way out of the Jindal mess created by its own party. Rather, it's a club to beat Edwards before he seeks re-election in 2019. Tax reform is so complicated, involving at the least many separate bills that must get a two-thirds vote of House and Senate, as well as potential constitutional amendments that must be voted upon by the people.
Each step is a chance to cry for cutting the budget instead of making the system "fairer," because people are likely to notice when their income tax goes up, but they might not notice when their sales taxes go down because of the swap.
The cut-the-budget-first crowd has little credibility; as Edwards noted before CABL, the state has had to cut and cut again, and the instability of state revenues is causing long-term problems. Lawmakers may say they want cuts, but as a group they are reluctant to make them, as each has priorities that require your tax dollars to fund.
So potentially every step of the way is an opportunity for partisan attacks, even while hypocrites in the Legislature say they are for "fair" tax reform.
The dirty secret in all this? Louisiana has one of the worst tax systems in large part because it is so skewed by breaks to upper-income taxpayers. And those are the people legislators listen to, along with a gaggle of self-interested lobbyists to tell them how smart they are.
A second political secret: Legislators afraid of the political consequences of reform are wrong.
The state and local tax burden in Louisiana is one of the lowest in the nation; adjusting even the most egregious tax breaks for the upper-income taxpayer does not radically change their overall burden, because it starts from such a low base.
A package of changes that reflects the general consensus is going to be unpopular with some, but many businesses and most voters are likely to benefit. If the Legislature can get its act together and avoid being trapped by the extreme minority, tax reform doesn't necessarily have to be hard.
Email Lanny Keller at firstname.lastname@example.org.
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