I went shopping over the weekend, checked my receipts and saw that I was charged 4.45 percent of the price of my purchases in sales tax. Had I purchased the same items a month ago, I would have been charged 5 percent.
So that’s a tax cut, yes?
No, a top official with Americans for Tax Reform — the organization headed by Grover Norquist, the anti-tax absolutist who had former Gov. Bobby Jindal’s ear — has been virtually screaming at the top of his lungs on Twitter. It’s a tax increase, Patrick Gleason, the group’s vice president for state affairs insists, because had the Republican-majority Legislature and Democratic Gov. John Bel Edwards simply allowed the temporary one-cent tax to expire, the rate would have dropped to 4 percent.
Of course, that would have meant some pretty drastic cuts in state spending on higher education and other areas, but Gleason doesn’t live here, so that’s not his problem. Nor was it Norquist’s, back when he was lauding Jindal for enacting the sort of policies that led to the state’s budget crisis in the first place.
The good news for Louisiana taxpayers is that the requisite two-thirds majorities in both houses of the Legislature ignored this semantic fight and did what they had to do, which was to decide how much government they were willing to fund and adopt a method to pay for it. That’s a more difficult task at the state level than it is in Washington, since states can’t just run up deficits the way the federal government can. If they don’t raise the money, they can’t spend it.
Here’s how one conservative lawmaker put it at the time, in what amounted to a crash course on adulting: “I don't want to be known for raising taxes but I'll be damned if I'm going to cut $300M from higher ed,” said state Sen. Jack, Donahue, R-Mandeville.
It took a while to agree on an amount, for reasons that had much more to do with partisan posturing than with minuscule practical differences in what taxpayers would pay. But the willingness of many conservatives to vote for at least some portion of the renewal — heck, the Republican caucus chair, Lance Harris, even put his name to one proposal — shows that the old Norquist/Jindal days are behind us. And good riddance.
What’s not behind us is the need for a saner tax system.
The tax renewal that finally passed at the end of this year’s third special session and just before the drop-dead deadline lasts for seven years, which means the next expiration will be some future governor and Legislature’s responsibility.
But the arrangement still falls short of the type of long-term predictability that bonding agencies and investors crave. And it still leaves Louisiana overly reliant on sales taxes, which are generally considered regressive, even though the state exempts necessities such as food, utilities and prescription drugs. That provision is the last vestige of the otherwise abandoned Stelly Plan, which put more emphasis on income taxes and was the state’s last real stab at smart tax reform.
There’s been some talk that, with the fiscal cliff averted and a fiscal legislative session scheduled for next year, lawmakers might finally take on the hard task of restructuring the tax system. Yet anyone who saw how hard it was to agree on the tax extension — basically the path of least resistance — knows that’s not going to happen, particularly in an election year.
So this is the new reality. With the lower sales tax rate in place — whatever locals or outside Washington interest groups want to call it — Louisiana has apparently dropped from having the highest combined state/local sales tax in the nation, according to the Tax Foundation. Tennessee now holds the top spot by a hair, 9.46 percent to 9.45 percent.
But the state hasn’t addressed its structural weaknesses, or adopted a permanent solution, and there’s almost no chance it will in the near future. That, not whatever has those Washington folks all worked up, is the real shame of the situation.