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Democrats mistakenly think LA taxes, spends too little

Perhaps one reason why Louisiana’s Democrats are slipping into political irrelevance is they see taxing and redistribution of wealth as more important than spending less to reducing bloated government in order to solve the problem of state budgetary deficit.

It’s difficult not to draw this conclusion when parsing the outcomes of a powwow many legislative Democrats attended some days ago where some of them, including the highest ranking of them all state Sen. Pres. Joel Chaisson, argued that temporary tax increases ought to be part of any package to deal with a predicted $1.6 billion deficit for the next fiscal year.

The implicit ideas here, in suspending some tax breaks such as for sales taxes for energy for business, the deductibility of itemized expenses permitted beyond the standard federal income tax deduction against income for individuals, and in recent rate reductions for middle- and higher-income tax household filers, are that Louisianans and their businesses, especially those earning higher incomes, don’t pay enough in taxes and that increased taxation to support higher spending will not hurt the economy. Empirical investigation shows as demonstrably false both implied notions.

According to the Tax Foundation’s invaluable calculations with the latest data, compared to other states Louisiana’s business suffer higher state and local taxation, ranking only 36th (that is, 14th highest tax burden) in its Business Tax Climate Index. In per capita terms for individuals, the minority who own homes get off easily with property taxes as the state has the fourth lowest ($463), but almost the entire population endures the fourth highest sales taxes ($2,168) and are 35th in income taxes ($715). However, in the last instance keep in mind that of all household filers the bottom 42 percent in adjusted gross income ($25,000 or less) paid less than 4 percent of all income taxes collected, while the highest 13 percent (more than $100,000) paid a severe 58 percent of all income taxes collected, meaning the 45 percent of households in between paid around 38 percent. These statistics show that if there is any imbalance in taxation, Louisiana remains overtaxed.

Add to this the understanding that tax and spending policy very directly impact economic growth and thereby government revenue generation. As economic theory, history and statistical studies reveal, more taxes and spending are more likely to harm than help the economy. And it’s not like Louisiana is a modicum of spending restraint already – it ranks tenth in state spending per capita.

Especially in a recession, elected officials need to understand the harmful effects of tax increases and higher spending levels in government. Louisiana Democrats don’t appear to while the public, who unlike these privileged folks is suffering through the effects of vastly increased government spending at all levels over the past few years, does, which is why the public increasingly rejects Democrats at the ballot box.

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