Pelican Institute Says JBE’s Gross Receipts Tax Is – Make Sure You Sit Down For This – A Lousy Idea

Of course it is. Should anybody be surprised at the concept a European-style VAT tax on top of the nation’s highest sales taxes would make for economic stagnation?

In response to the release of Governor John Bel Edwards’ tax proposal yesterday, the Pelican Institute in partnership with the Economic Research Center at the Buckeye Institute (https://www.buckeyeinstitute.org/centers/detail/economic-research-center) released the following statements:

“If passed, a gross receipts tax would be a quadruple whammy for families and businesses across Louisiana by pushing capital out of the state, reducing production, raising costs and lowering real wages. From Shreveport to Slidell – the service industry to seafood – this tax is bad for all Louisianans,” Will Booher, Interim Executive Director of the Pelican Institute, said.

The Pelican Institute for Public Policy has partnered with the Economic Research Center (ERC) at The Buckeye Institute to model the impact of tax policy changes on Louisiana’s economy and fiscal balance. This collaboration and model will result in a written report and recommendations on how Louisiana can best address the structural deficits in our state’s fiscal policy.  The ERC at The Buckeye Institute is perhaps the foremost authority on the implications of the Ohio Commercial Activity Tax on which Governor Edwards has reportedly modeled his Gross Receipts Tax proposal.

“Ohio has seen the impact this type of tax policy can have on a state,” said Buckeye Institute President and Chief Executive Officer, Robert Alt. “This tax hurts average citizens by creating conditions in which jobs are cut and prices go up.  It is unclear why any state would want to import this type of plan.”

The Buckeye Institute, based in Ohio, provides state-based think tanks, state legislatures, and governors detailed reports, models, and economic simulations on: energy policies, government spending programs, health care, labor market mandates and various levels and types of taxation at the state level. Many states, including Ohio, have neither the government staff nor the resources to perform such thorough assessments on the costs imposed by major public policy proposals. Through Buckeye’s ERC, The Buckeye Institute serves and meets this critical need in states across the country.

What we heard from our sources in the legislature was that the governor’s tax plan isn’t just dead on arrival in the House, it’s cremated on arrival. And the other piece to this is the bill proposing it was sponsored by Rep. Sam Jones, who was Edwards’ long-time pal in the House. To date, most of the legislation Edwards has been able to pass which has gotten somewhere had Republicans as sponsors; without a whiff of bipartisanship a Republican House is going to laugh these ideas out of school.

Sam Jones has limited influence on this legislature. In last year’s regular session he offered 20 bills. Only five passed, one of which was a change to the city limits in Franklin. He’s not a big enough hitter to overhaul the state’s tax system. We were told by one source in the legislature that one reason Edwards had to wait until yesterday to introduce his tax plan, rather than doing it Monday at the Baton Rouge Press Club like he’d planned, was that he couldn’t find a Republican who’d put his or her name on it.

So the good news is this job-killing mess of a plan won’t become law. The bad news is when the legislature kills it and demands Edwards rein in state spending to balance his near-$30 billion state budget, we will get more manifestations of the Washington Monument Strategy out of the governor and his underlings. It’ll be the parents of kids with trach tubes, and the developmentally disabled, and the university presidents, and whatever else they think will make legislators feel guilty about cutting the budget.

It certainly won’t be the computer Mahjongg experts making 60K in air-conditioned offices with nothing to do all day who get cut, and it absolutely won’t be the fatcats holding state contracts of questionable utility. And it unquestionably won’t be the local governments who walk away with free swag from the Capitol every year, personifying the welfare-pelicans on the state flag.

But that annual pantomime hasn’t killed us yet, and it won’t kill us this time. Edwards’ tax plan would. We can survive this, and him, and make it to 2020 when it’ll be time for some real reform.

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