Louisiana's tax system is not quite the most unfair in the nation, but that's just because it is standard practice in America to place a disproportionate burden on the poor.
According to a study just released by the Institute on Taxation and Economic Policy in Washington, Washington State sets the regressive standard, while we rank 14th. If your income is $17,100 or less in Louisiana, you'll pay 11.9 percent of it in taxes. That number shrinks the further you go up on the income scale and is roughly halved by the time you reach fat-cat territory. Sales and excise taxes take 9.2 percent from the poorest, and 1.2 percent from the richest.
Such tax policies exacerbate “rising income equality,” which is “unconscionable,” in the institute's view. Likewise, Jan Moller, director of the Louisiana Budget Project, believes it is “not unreasonable to ask the highest-income residents and corporations to pay their fair share of state and local taxes.”
Maybe so, but don't expect those higher income residents and corporations to fall over one another in the rush to pay more. We tried fairness once, and they soon put a stop to that. The result of that experiment was a tax system as lopsided as ever while recurring budget deficits and crises became a crushing inevitability.
A decade ago, recently elected Gov. Bobby Jindal and a bunch of new legislators who made up the first post-term limits class were still findin…
Everyone knows that the recipe for a progressive tax system must include reducing sales tax rates and a switch of emphasis to income taxes. You don't need a degree in economics to see that sales taxes penalize households living hand-to-mouth while the rich have plenty left over to invest in stocks and bonds. That was a truth universally acknowledged 20 years ago, when advocates of reform also pointed out that income taxes produce more reliable revenues that grow as the economy expands.
Thus in 2002 Louisiana adopted the Stelly Plan, which cut sales taxes and boosted income taxes in a more or less revenue-neutral fashion. That was accomplished by state constitutional amendment, so the idea had broad public support to begin with.
But people notice higher income taxes, while savings at the shops do not register so strongly. Besides, many taxpayers figured that their income taxes had gone up by more than their sales tax payments went down, and no doubt they were right. If the poor are to get a break, it is obvious that their wealthier fellow citizens have to pick up the tab. A lot of taxpayers nevertheless felt they had been sold a bill of goods and then State-Rep. Vic Stelly, for whom the plan was named, suffered the traditional fate of the prophet in his own country.
If taxpayers — or at least wealthier taxpayers — clamored for the income tax raises to be scrapped, nobody proposed repealing the other half of the Stelly Plan. That was the state of affairs when Bobby Jindal began his first term as governor in 2008 by noting how idiotic it would be to eviscerate Stelly at an annual cost to the state of $358 million.
But free money never loses its appeal to the voters and Jindal soon caved in. In fact, he went further than that; when he announced the death of Stelly, you'd have thought he came up with the idea.
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…
He certainly came to embrace it with enthusiasm. It marked the beginning of his highly successful campaign to wreck the state's finances and drastically undermine such fundamental public services as higher education and health care in the name of starving the government beast.
The state budget remains a mess, with legislators seemingly determined not to look beyond sales taxes for a solution to our chronic shortfalls. The Institute on Taxation and Economic Policy notes that Louisiana's tax structure contains other regressive elements, such as the state income tax deduction for federal taxes paid, the lack of inheritance taxes and a low earned income tax credit. The central thrust of tax policy is to favor the better off, and it is the better off who have the political clout. Until they decide they have too much money, radical change is not in the cards.
Email James Gill at Gill1407@bellsouth.net.