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LA Democrats oblivious to destructive policies

The toxic mixture of envy and cluelessness of Louisiana’s Democrats went on full display yesterday, captured by a single remark with the handiwork of their governing philosophy as the background noise.

In the wake of the failure of HB 38 by state Rep. Malinda White, which for the next two years only would have allowed deductibility of 57.5 percent of excess federal income tax deductions on state individual income taxes unless the combination of mortgage interest and charitable contributions exceeded that mark, state Rep. Gene Reynolds, head of the chamber’s Democrats, stupidly opined “They voted to protect the interests of the super-rich.” From such a statement, and if representative of the state’s Democrats, demonstrates they have no clue about the bill’s potential consequences or the bankruptcy of the ideology behind it.

Officials of the foremost backer of the bill, Democrat Gov. John Bel Edwards, alleged that most of the 23 percent of returns that took the deduction concerned filers of $100,000 and over. The latest data (fiscal year 2014) indicate that about 25 percent took it, at an average of a little over $2,800.

But it’s questionable whether even a majority of filers who availed themselves of it hit the $100,000 adjusted gross income mark, much less the large majority. Only 10.79 percent of filers came in at or above that level and likely a few do not qualify for it. So the majority of filers affected by this would come from incomes below that.

Of course, the assertion made could be that the distribution of excess deductions – its five major categories being mortgage interest, charitable donations, medical expenses, theft/casualty losses and taxes – below $100,000 disproportionately come from interest and donations. Yet a review of the most recent federal data (2013) shows this as unlikely. While statistics are not available on excess deductions for four of these categories, data for excess claims of medical expenses show almost as many filers (47 percent) below the $100,000 level took this excess deduction as those above it, and about two-thirds of the claimed deduction amounts came from this group.

With the bill written not to affect excess medical expense deductions, by Reynolds’ definition, this aspect alone – not including that some filers take big losses – means the “super-rich” probably would not make up a majority of those impacted by the bill. That is, if one even buys the argument that the implied $100,000 adjusted gross income makes those above it “super-rich.”

Consider that within this almost 11 percent of the resident filing population about 60 percent do not make above $150,000, so if you really want to stoke some class warfare, it might hold up better to call those above that standard, fewer than 5 percent, the “super-rich.” And some in that lower level will have large households and/or major medical expenses – and in the case of the latter, unlike at much lower levels of income, they have no access to state-supported health care in the form of Medicaid and its waiver programs. Finally, consider the $100,000 to $150,000 group pays 17 percent of all state income taxes, and those above them fork over 37 percent, so this bill would have made the one-in-nine Louisianan households who pay over half of all income taxes exert even more effort to pull the wagon.

Reynolds’ inaccurate remark illustrates the envy that liberalism tries to whip up to justify its Robin Hood mentality. And it’s entirely tone deaf to a couple of other recent pieces of news reflecting the wages of liberalism in Louisiana’s public policy: that corporate income tax collections well may come in under estimates and considerably so to the tune of $200 million fewer for the year, and that Supplemental Nutrition Assistance Program numbers in the state have risen to an all-time high.

A deteriorating economic picture in part caused by exogenous factors such as declining oil prices and the economic transformational strategy of the Pres. Barack Obama Administration that seeks to grow government for redistributionist purposes and constrain free market activities explain this. But almost all other states continue to outperform Louisiana on the SNAP numbers, and this and disappointing corporate collections are a consequence of relentless tax hiking over the past 13 months that looks to become a whopping $2.3 billion annually for the next two years. Basic economics: take more money out of the private sector and you get less economic activity and therefore fewer government tax revenues.

Chalk that up as a lesson entirely unlearned by the likes of Edwards and Reynolds, whose desire for oversized government continues making the same mistake that has led Louisiana to experience historically lower levels of economic development. However, to admit that means trashing their core beliefs, and for them the needs of the state never trump their fealty to ideology before people.

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