Its latest
study reviews the state’s means of generating revenue. This follows papers
dealing with intergovernmental relations and budgeting. Although a complete
overhaul along the lines of these efforts would require amending the Constitution,
and frankly in ways unlikely to gather the necessary legislative support to present
these to voters (which is why the group favors a constitutional convention to
carry it all out), statutory changes it suggests would make for improvement.
The tax reform it argues for would produce a
flattened, broadened, and largely revenue-neutral code when compared to two
different baselines. For individuals, establishing a flat income tax rate of
four percent while raising the standard deduction and wiping out some
big-ticket exemptions, such as for federal taxes paid and excess itemized
deductions, as well as other smaller ones would keep revenues stable while
actually shifting more burden onto a small number of higher-income filers. This
scenario it offers as a fallback to adjusting deductions further to roll back
tax increases made last year.
For corporations, it would wipe out that income tax entirely. Why not; as the report notes, the vast majority of this tax goes uncollected because of numerous exemptions. It makes much sense just to get rid of it and all the credits and rebates that go with it — which, of course, would lead to intense special-interest lobbying in opposition. Short of that, it recommends a lower flat rate and excising most exemptions. Additionally, it asks to eliminate the franchise tax and the inventory tax, which promote counterproductive legerdemain, and incentive programs that create jobs, such as the Motion Picture Investors Tax Credit, because they do so wastefully.
Under either the current baseline or one without
the 2018 tax hikes, the state would take in fewer revenues, but unleash, in the
second instance, annual gross domestic product growth 0.5 percent higher and
employment growth 0.2 percent higher. Eventually, the higher wages and lower
unemployment that result should allow tax revenues to catch up.
This tax reform should occur in tandem with changes
wrought for local governments. A previous Pelican study
on these outlined how restrictions on parishes to raise their own funds
interact with generous state subsidization to create a dysfunctional
relationship that spends policy-maker energy on lobbying for redistribution
rather than in concocting policies to compete for economic growth.
While just about all of the specific changes the
reports would like to see have appeared in either or both of legislative backed
initiatives in 2011
and 2017,
as well as have appeared in this space and in other places, it’s still good to
have these collated and presented as a whole, with some up-to-date numbers
backing up their value. These also follow a report
issued last October on budgeting practices, which sensibly (and, again, echoing
others) calls for dramatic curtailment of dedicated funding, increasing the
size of the Budget Stabilization Fund, a realistic state spending cap, reducing
gubernatorial discretion over capital budget items, and implementing contingency
budgeting.
It’s especially good to see Pelican take on a
bigger role in public policy debates, whose participation had slacked in recent
years (for example, being completely AWOL in the debate over Medicaid
expansion, where leftist interests dominated the analytical debate, challenged
only by this space and occasionally other voices). With these reports, it shows
itself ready to ramp up its level of participation, a welcome development.
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