Key legislators and number-crunching staffers are working hard on a yet undisclosed general revamp of Louisiana’s troublingly bad tax code.
The solution? Simple.
Why are the insiders working so hard on a problem that is simple? Well, the broad outlines of tax reform are clear enough from a report issued in 2017 by a panel of experts and eminent citizens commissioned by the Legislature itself.
In, again, broad outlines, close tax loopholes — many of them unique or almost so, compared to other states — and then lower rates or get rid of some taxes that are bad for business or unduly tax lower-income people. Or both.
That the Legislature did not adopt the commission’s recommendations in 2017 was a huge missed opportunity. The conventional wisdom in the State Capitol is that tax changes can only happen during a fiscal session, so only odd-numbered years, and only in nonelection years.
In 2019, all legislators and statewide officials, including the governor, were up for election; who wants to make controversial votes in that environment? Not many legislators. In 2023 there will be another statewide balloting.
“People across the political spectrum can agree that Louisiana’s tax system needs a lot of help,” said Jan Moller, head of the Louisiana Budget Project, a Baton Rouge think tank that advocates policies for low and middle-income people. “A lot of the ideas are no-brainers. We agree in general. But it’s the details, it’s always the details.”
Ah, no-brainers have had a tough time in Capitol halls. For one thing, in 2016 and 2017, Louisiana faced huge budget shortfalls from the failed financial policies of former GOP Gov. Bobby Jindal, and Republican leaders were loath to repeal some of the tax exemptions and other breaks that were hallmarks of Jindalnomics. They also did not want to see the new governor, a Democrat, get credit for tax reform.
Their political plans went astray when Gov. John Bel Edwards was reelected in 2019 and if — a big if indeed — the Legislature passes reforms along the lines of the 2017 report, he’s going to get some of the credit. However, he cannot run for another consecutive term, so the GOP ought to be willing to work with the administration on new tax policies.
What don't we want to see? Any extension or expansion of sales taxes, already raised too high as a result of the 2016 emergency tax measures required of Edwards and lawmakers in that crisis.
As Moller notes, the devil is in the details. But the architects of tax reform have already done their work, in the 2017 report. Much hammering of nails and Sheetrock remains to be done, but the fiscal house can be rebuilt.
That will also involve some heavy lifting. Sun Tzu, a philosopher of human conflict, said centuries ago that in war everything is simple, but the simplest things are difficult to do. So it is with tax reform. We hope that the difficulties can be overcome in a way that conservative and liberal lawmakers can make tax reform work for the broad public and not for particular interests.