House must modify bad tax deal or reject it

The Louisiana House of Representatives should walk away from the state Senate’s bad tax-raising deal, unless that undergoes major, substantial revisions.

By the end of today, unless both chambers agree to this legislation and a budget, a third special session of the year likely would have to take place. Without a budget after Democrat Gov. John Bel Edwards vetoed a workable starter version from the regular session, that next iteration depends upon disposition of partial renewal of temporary taxes.

The House, through HB 27 by Republican state Rep. Lance Harris, proffered a five-year extension of a third of the temporary sales tax expiring in 27 days, plus continued suspension of about 100 credits, business utilities, and vehicle purchase exemptions. The Senate started with a half cent permanently, but passed a version extending to seven years.

Additionally, the Senate amended and returned HB 18 by Democrat state Rep. Katrina Jackson. This would redistribute proceeds from a tax exemption for those paying taxes out of state to eligible Earned Income Tax Credit recipients to the tune of a 43 percent increase, plus some extra retained by the state as long as the state sales tax remained above 4 percent.

It’s a raw deal for taxpayers, for three reasons. First, 0.5 percent is too high and, second, is for too long. The state will not need an extra nearly $400 million for that long or almost $150 million on top of that for the near future. At seven years to bake in, it might as well be permanent that would share the same disincentive to pursue fiscal reform and also be that much harder to cast aside. Finally, it could allow the odious EITC to continue in perpetuity should regressive forces maintain the higher sales tax, even as their least preferred alternative, to keep outsized government.

To approve of this, at the very least it must come back to a five-year extension, although three would be considerably more beneficial. Also, it cannot renew the sales tax as high as a half percent. Finally, it must sunset the EITC hike -- apparently necessary to assure passage with the two-thirds majority requirement in force -- on the same date as the sales tax extension three to five years in length.

Short of this, anti-big government House Republicans must axe it. With enough of them to block any tax increase, they still hold the cards. No deal made here means no budget and another special session, inconveniences that affect Democrats’ political fortunes much more than Republicans’ given Edwards’ veto and their fealty to government spending.

As noted yesterday, Louisiana can keep doing what it has to stunt economic growth and remain at the bottom of states on social and economic measures, or, by resisting the Senate’s entreaties, try to reverse that for the better.