Ok, so where was I?
Oh yeah, I ended last week by explaining that our state’s economic policy sucks.
If you graduated grade school, however, you already knew this.
This week, I will further attempt to explain why it sucks.
Last week, I revealed that Louisiana recently has missed out on some big projects that would have undoubtedly bolstered our economy.
However, as I previously mentioned, our tax policies got in the way.
I applaud Governor Blanco’s efforts to attract business, but with her mindset on taxation issues, we will never clear our business hurdles.
The first issue is our corporate sales tax. Louisiana charges a corporate sales tax of 8 percent on net profits over $200,000.
Other states, including Texas, exempt businesses from paying this tax in order to lure them into the state.
Obviously, Texas is doing something right. Or Louisiana is doing something wrong.
Even with the massive problems of immigration, Texas has an average net income well above that of the state of Louisiana. Furthermore, we are the second most poverty-ridden state in the union.
Although I see the benefits of giving tax breaks to the lower end of the economic strata, it does them no good if they don’t have jobs to pay taxes with.
Although this seems like an easy problem to remedy, I assure you that it is actually quite a conundrum.
To be able to pass legislation allowing a tax break for business, the state would have to initially draw money from elsewhere in order to keep the state afloat while we gave businesses time to grow. Where would this money come from, you may ask?
I think we all know the answer to that question.
The taxpayers in this state (or any other state, for that matter) do not react kindly to any sort of new taxes levied upon them. Corporations have plenty of money, and surely they won’t mind spreading a little bit of it around the state, right?
So, there you have it — our taxation problem in a nutshell. What would it take to correct this problem?
Senators with brass ones that would be willing to jeopardize their chances of re-election by voting for a drastic tax change in this state.
Instead, they are unwilling to even make the temporary taxes now in place on businesses permanent.
The issue I am referring to is the passage of a five-year renewal on the state’s business utility tax.
I am not in favor of this tax, but I understand how many legislators found it necessary.
The state is willing to cut taxes on new equipment purchased by businesses, but only if it can get the money elsewhere.
And we certainly know where they won’t look for extra money: neither in the taxpayers’ pockets nor by cutting programs (once again, it’s all about what’s right for re-election, not what’s plain right).
Temporary taxation does not even allow existing state businesses to properly forecast long-term expenditures because they don’t know if the law will change altogether within the next few years.
Businesses hate change.
The law of the marketplace makes them have to make enough changes without having to worry about unstable tax laws.
Either we need to establish the utility tax as a permanent tax, or abolish it altogether.
This tax is just the tip of the iceberg.
Next week, I will examine a few other taxes that are about as dumb as showing up in the Tiger Stadium student section wearing crimson and white, and how the state can avoid the proverbial “bourbon bath” that we are headed towards now.