The invaluable Tax Foundation’s latest report
on sales taxes placed Louisiana in the third-highest spot for combined state/local
rates, having only the 38th ranked state rate but the highest weighed
local rate. In fact, in a sense, the state rate is both not high enough and too
high, courtesy of the remaining part of an unwise constitutional change almost
a decade ago.
While lower rates in any form of taxation are preferred, taxation
itself is a necessary crime of theft in order for government to operate. But if
we are to allow government to take our property, the general immorality of that
is mitigated by making sure the burden is borne equitably by making sure it is
done the most efficiently – in the manner that is least costly and most likely
to encourage economic development that therefore brings wealth to all who
contribute by their participation in creating that wealth. That is, nobody
should be under- or over-taxed relative to their contributions to societal wealth
creation.
Unfortunately, Louisiana’s present system violates efficiency
rules. Most egregious at the state level is its refusal to collect from a
broad base with undifferentiated rates. Its income tax is graduated and
pockmarked with exceptions, while its sales tax exempts certain considered essential
commodities and is subject to various tax-free calendar dates (such as the one
this coming weekend). This distorts collection through avoidance strategies and
wastes resources in pursuance of those strategies. Particularly with the sales
tax, it misses opportunities to collect more without dampening economic
development by ignoring the elasticity of taxable goods, and with income taxes
it discourages investment and encourages debt.