Search This Blog


Events add more controversy to fall LA amendments

Matters have gotten interesting regarding two of the six constitutional amendments with which Louisiana voters must struggle next week.

One has generated controversy because its impact appears indeterminate. Amendment 3 would remove the deduction for federal taxes now enjoyed by corporations, but because of two statutory changes that go into effect only if the amendment passes, it also would eliminate the several brackets of income tax rates applied to corporations and collapse them into just a 6.5 percent tax, below the current highest category at 8 percent.

As experts point out, the federal income tax deduction artificially inflates rates, to some degree takes state tax policy out of its own hands (because federal tax changes happen independently), and does not guard against double taxation of equity investments. Optimal tax policy emphasizes simplicity, and the removal of the deduction plus the added-on flat rate accomplishes this.

But the price could come with an undesirable increase in total taxation. While the flat rate would have lowered overall take by $86 million in fiscal year 2014, when factoring in absence of the federal deduction that actually turns into a $30 million annual hike. Yet even that figure carries uncertainty because it extrapolates from just one data point – FY 2014 with $200 million lost by the deduction and $468 million in corporate income taxes paid. Using five-year averages of the most recent data available for each ($187 million from the deduction and $325 million paid from income), that equates to more like a $20 million increase.

And these numbers depend upon static tax behavior. For example, if the deduction amount fell while the tax paid number rose, it could cause an overall tax decrease. Additionally, if after time and experience with the new rules showed an overall increase, then lawmakers could go back and move rates down, having succeeded on the larger point of getting rid of the deduction and its negative consequences.

Thus, a number of state interest groups that historically have stumped for fiscal probity have voiced support for the measure, as well as national anti-tax groups like the Tax Foundation. Yet other interests, because the initial numbers show a relatively small increase, such as the perspicacious Louisiana politics website The Hayride have counseled to vote against it.

That this measure would draw much debate seems obvious, but now perhaps the most innocuous of the six suddenly has become more relevant, thanks to the obnoxious behavior of Jefferson Parish Registrar of Voters Dennis DiMarco. In the early voting period currently ongoing he kept a voting machine, unattended, away from other machines for use of people not mentioned in statute, but for whom he thought important enough to rate its use. This apparently broke at least several laws.

DiMarco, with zero legal justification, made the reserved machine available to those other than the disabled such as firefighters, law enforcement officers and military personnel, whom he said “we have an obligation to help out.” He said that despite the law stipulated grouped machines within sight of commissioners, that didn’t figure this broke the law “because I felt the machine was in a polling place, which is my office.”

No doubt DiMarco, a longtime parish employee who earns more than the governor, should have known better. In fact, registrars who take and demonstrate competence in continuing education courses about their job qualify for extra pay. But constitutionally they have to meet no other qualifications other than being a qualified voter in the parish.

Amendment 1 aims to change that, by allowing the Legislature to set qualifications. As in the case of #3, companion legislation already passed that would kick in with voter approval of #1 would set minimal education and/or experiential qualifications for the job in the case of new hires.

Those contingent laws would have done nothing to prevent DiMarco’s presumed illegalities. However, with the ability of the Legislature to add qualifications, passing the amendment permits future legal changes that could add strictures designed to limit the chances something like this happening. That only makes it even more necessary to approve Amendment 1.

No comments: