Has Gov. John Bel Edwards misread the public mood about tax reform?
He surprised and disappointed advocates of changing Louisiana's broken tax system by advancing a gross receipts tax on businesses, apparently the subject of a major announcement Wednesday.
Shelved were the volumes of studies over the past few years, and for decades, showing a better path forward — but one that the governor apparently found too hard a sell with the Republican-led Legislature.
So tax reform is going to die on the operating table, amputated at the neck.
Edwards' head of the Department of Revenue, Kim Robinson, said the gross receipts tax plan is proposed in part because voters in November rejected Amendment 3, one of six constitutional amendments on the ballot.
Gov. John Bel Edwards is pushing back the public release of his tax overhaul package, probab…
The amendment, supported by only 44 percent of voters, would have eliminated a major corporate tax break in exchange for lowering the state's corporate income tax rate.
Ask about anybody in politics, and they'll call this a lame excuse. The amendment had support from good-government groups, but the Edwards administration did little, or nothing, to advance the idea.
The proposal, a compromise legislators focused on corporate income taxes, was described on the ballot only as elimination of the deduction for federal income tax paid. What was unmentioned, and unsold by Edwards or his political team, was the reduction in rates and other reforms that would have been triggered by passage of the amendment.
And what else was happening on Nov. 8? Oh, only one of the hottest presidential elections of recent history that turned out large numbers of Republican voters in Louisiana casting ballots for Donald Trump. Reading what was on the ballot, with precious little other explanation, the public opted against it, but hardly in a landslide.
In those circumstances, isn't 44 percent encouraging?
Rather, it appears to have been taken as the signal to the governor to fall back on a gross receipts tax. That is not a compromise, really, as few reformers want a gross receipts tax and it was not part of the comprehensive recommendations of panels of experts looking at the state's broken tax structure.
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It's difficult to predict if voters would reject a real tax reform scheme involving constitutional changes to taxes, but a 2017 Louisiana Poll by the LSU Public Policy Lab showed that voters in fact have a pretty nuanced view of the state's tax and spending problems.
In the abstract, LSU professor Michael Henderson said, we want cuts in programs we don't like instead of raising taxes — but voters given the choice do accept revenue increases to pay for needed services. A gasoline tax increase, for example, gets high marks from voters if dedicated to transportation improvements. The Legislature can do that unilaterally, without a constitutional amendment.
Further, Henderson said, there appears not to be a big Republican-Democrat divides in the respondents' replies to tax questions. Are GOP legislators wedded to budgetary catastrophe, more so than their constituents?
The governor has doubtless received much negative feedback from legislators about income tax increases; those are politically sensitive, because high-income earners are the folks who have legislators' attention.
But the experts over the past few years have understand that you can't balance the books without tackling the billion-dollar hole in the budget caused by reckless cuts in income taxes in 2007-08. One John Bel Edwards, as a freshman legislator, voted for that consensus disaster, but he has recognized since that income tax restoration is part of the solution that should be embraced.
But if not now, when?
Email Lanny Keller at firstname.lastname@example.org.
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