Edwards attempt to forestall right-sizing of state
government hinges on finding new revenues to support a bloated state sector.
Trumpeting budget deficit after budget deficit best accomplishes this
objective. Thus, any organic creation of new revenues – i.e., a larger tax haul
without raising rates or scrapping exceptions – puts a dent in this plan as it
reduces the deficit, relieving pressure on instituting permanent new revenue
sources – particularly his preferred progressive income taxation especially on
corporations or fewer exceptions where the bulk of newly-unshielded dollars
would come from transactions disproportionately undertaken by higher-income entities.
Thus, his administration has tried to throw cold
water over the beneficial
impact tax cuts passed the Republican-led Congress and signed into law by
GOP Pres. Donald
Trump would have on the projected fiscal year 2019 budget for Louisiana. Reviewing
those changes, and only partially, the Edwards Administration said it would
mean a boost of $200 million to $250 million for FY 2019. That covers only
individual income tax collection; the Administration has abjured from
estimating the impact that corporate tax cuts would produce, so the figure
could go much higher.
But the Administration points out that the individual income tax changes’ impact for this year should show up in the latter half of FY 2019, when tax filing for this year occurs. It claims it passed on trying to gauge the corporate income tax changes from the complicated nature of such calculations.
These are just excuses to delay recognition of
revenues. That latter input will start contributing prior to the July start of
FY 2019, which almost certainly would narrow the deficit calculation for this
spring’s budget-building. And the former could begin this year, with the
Internal Revenue Service already
planning to change its withholding tables at the beginning of February, if
the state did the same.
Logistically, nothing prevents the state from
doing the same, which would have the effect of enlarging the amount of money
deducted from Louisianans’ paychecks. While no politician likes that, it
becomes a case of pay me now or pay me later: tax bills go up in either 2018 or
2019 – and 2019 is an election year, so it would seem electorally to make more
sense to take the medicine now.
Yet Edwards want to hold off because he holds out
for what he thinks will best aid his reelection chances and lock in the
oversized state sector: permanent state tax increases borne heavily by
corporations and middle class-and-above individuals. By claiming to solve a
chronic deficit in partnership with the Republican-led Legislature, forcing it
to share responsibility for the tax hikes, he would take minimal blame for
causing these while reaping the reward of allegedly saving the state from
fiscal doom. Better, by holding back withholding table changes until 2019, income
tax increases from federal policy changes gets lost in the shuffle of the other
state tax policy adjustments.
Edwards does take a risk. If the Legislature
forces him into no tax increases this year with furthering paring of
government, or into swallowing a broad-based, proportionate tax increase such
as renewing all or part of the temporary state sales tax fixing to roll off at
the end of June, he largely fails to maintain inflated government and becomes
known as the governor who increased permanently sales taxes on lower-income
individuals and income taxes on all others (even if federal tax policy
triggered that), right during his reelection campaign.
However, Edwards seems willing to go for it.
Understand that his real reluctance to want incorporating the variable of
corporate income tax change impact and altering individual income tax
withholding tables now in predicting the deficit comes as a product of campaign
strategizing and agenda advancement. Nothing must stand in the way of his
turning back the clock, and reelection makes that easier still.
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