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Despite data, Gannett media deny tax cutting sentiments

Louisiana Gannett media missed the story entirely – it’s not that people are satisfied with their level of income taxation as the Legislature looks at making changes there, but that anti-tax sentiment is growing statewide despite events that reduced taxes for many that lead a majority of Louisianans to wanting income tax cuts now.

The Gannett article addresses the results of a recent survey put out by the Louisiana State University Public Policy Research Lab where citizens were asked about their levels of satisfaction with different kinds of taxes – income, sales, and property – and compared them to results of similar queries in years past. To give some historical background:

  • Income tax rates have declined for many over the past four years – except for those who pay the majority of income taxes, which have gone up substantially
  • State sales tax rates have gone down, courtesy of the same changes that increased income taxes for those already paying the majority
  • Property tax rates are set by local governments so there is variability here, but, generally, they have stayed the same absolutely and declined relatively over this time period because the vast majority of governing authorities over these rates allowed these to roll down after reassessment increased the total value of the property able to be taxes
  • Also worth noting is that, despite the fact that Louisiana’s property tax rates are among the lowest in the country (because of the highest homestead exemption in the country which allows seven-eighths of all households to escape direct property taxation), its state and local burden in total are among upper third of states (a fact which apparently survey director Kirby Goidel did not know when he mistakenly said “Most people realize this is a relatively low-tax state”)

    So you might suspect that, at present, there might be relative satisfaction with income tax rates with lower rates now, sales taxes wouldn’t provoke much controversy, and the most people would be pleased with their property taxes. Over recent years, one might think there would be increased satisfaction over all three, because for most income tax rates have gone down, sales taxes have gone down, and property taxes have held steady but relatively speaking also have declined.

    Instead, the results show a public with perceptions at odds with reality in the past few years. Respondents seemed most dissatisfied with property taxes, the proportion of them fitting that category climbing by almost half over levels a couple of years ago. A similar increase was observed concerning thoughts on sales taxes. And while not as substantial, despite the fact most of them had gotten an income tax cut in recent years, the proportion of those who say taxes are too high also has risen over those years, while the proportion of those who say the level is “about right” has decreased -- something the Gannett article left out. (Note: the copy of the full report LSU put out on the Internet was damaged and rendered unreadable, so I had to go back through previous years reports to learn this.)

    The article glossed over this information, but emphasized that the highest approval for current use of the state surplus is for expenditures rather than tax cuts. Added to that the information that a bit more than half the state seems all right with income tax levels, and you would think there is not an “anti-tax” sentiment in the state, as the article would have one believe. Not at all: a majority want income taxes lowered, even though most of them are paying less now than four years ago. Add to this the growing frustration with the levels of all kinds of taxes and, as the summary report does point out but the article does not, that “Louisianans are increasingly inclined to say that state taxes are too high and need to be reduced.”

    This leaves us with a tale of two stories. Gannett media would have us believe that the state’s residents are happy enough with the income tax as it is and therefore want to see spending of the surplus. The survey’s data, however, show a state increasingly hostile towards current levels of taxation and receptive to lowering income taxes, which would argue for lowering income taxes and thus, in the short run of this fiscal year, not to spend parts of the surplus on new items.

    These disparate views of different parts of the data are reconciled in two ways. For one, it is facile to suggest cutting income taxes and extra spending are mutually exclusive, as the article implies. In all likelihood, majorities in the state are looking for a bit of both.

    Also, when considering that the 57 percent who said income taxes were “about right” is much less than the 80 percent or so of households who got an income tax cut (and about three percent don’t pay any at all), or that the lowest half of Louisiana income taxpayers pay only 6 percent of total income tax collections (with an average tax burden of only about $130 per filer), the unasked question is why relatively so few people think income tax levels are “about right.” Thus, these low-to-nonexistent-income taxpayers may think their own levels of income taxation are “right,” but also believe the other, upper half of income tax payers who foot 94 percent of total collection should have their taxes cut in order to stimulate Louisiana’s ailing economy, consistent with the public’s increasing pessimism regarding the state’s economy as noted in the survey.

    More to the point, with the income tax burden disproportionately placed on so many, it’s no accident that the income tax would seem most satisfactory of the three kinds in a popular referendum, and therefore that the general anti-tax sentiments would be expressed more overtly in feelings about the two kinds of taxes more broadly distributed. This is the real story which the article tries to shunt to the side – anti-tax sentiment is growing and therefore recent tax cuts may not be enough not just for the public, but for good public policy as well. What data can be interpreted as ratifying an agenda of not cutting income taxes and increasing spending just as conclusively provides evidence that the public approves of exactly the opposite, this is a sentiment growing over time, and that legislators need to respond to it now while they have an optimal chance.

    And, from a political perspective, it should be noted that it is highly probable that not many of the half who pay six percent of income taxes vote while the vast majority of the other half that pays 94 percent of them do – something for state legislators pondering these cuts to think about in this reelection year.
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