APPEL: On Tax Reform, And What It Means

So what is tax reform, anyway?

To different people it means different things. Let me go out on a limb and describe my take on what I believe it means to key groups.

To Governor John Bel Edwards and his party I suspect that the majority feel that tax reform is a goal to ensure a steady source of revenue to feed a growing government structure. To some others in that group it may be viewed as a way to level income strata, in effect wealth sharing. In either case the endgame is the same, transfer evermore income from the wealth-producing segment of society to the dependent segment of society. The only variable is whether the transfer is done though growing government services or through some form of direct redistribution. State government must take care of its people but we must do so in a manner that is not just based upon the concept of just sharing wealth without any clear strategy to help people break free from government.

To business people tax reform probably has a few meanings but they are all rooted in the same concept, reducing the tax burden on business. The governor would have us believe that the main interest of business is some undefined streamlining of tax collection and laws. That fits his goal and it also is important to business, but from entirely different economic aspects. The governor wants more revenue but business wants to reduce its costs; in the main, those are mutually-exclusive concepts. Yes, business wants to see a much less complex tax code but its sole driving interest in doing so is to reduce overly burdensome costs – either from direct taxation or from the cost of compliance and accessing loopholes and credits.

To the average citizen “tax reform” is a great mystery. It is truly a technical debate between business and government, the average citizen only knows two things. First, he hopes that tax reform will lower his personal tax burden and second, he knows from history that probably won’t happen.

Government has an insatiable appetite for always growing spending under the vestiges of trying to be all things to all people. Politicians have found it impossible to define priorities and to tell people “no” when their demand for more spending doesn’t fit those priorities. That characteristic of government creates a fundamental drive for always finding ways to draw in more taxpayer money to feed spending.

Let’s look at a simple example, based upon data from the House Fiscal office in the last year of Governor Jindal’s term we spent about $22.6 billion of which $8.55 billion was Federal funds, the rest was derived from the citizens and businesses of our state. In the current fiscal year the plan is to raise $28.3 billion of which $13.09 billion is Federal. That means that in the first two years of our current governor’s term we have grown government by $5.76 billion of which we are raising an additional $1.23 billion from our own state sources. The governor also wanted an additional $441 million, but we turned that down. Now many argue that Federal funds are actually our taxpayers’ funds also, but that is another discussion for another day.

The media and the Left would argue that all this is only being fair, that we owe it to the people to grow government, that the budget reduction by Jindal from what was then the all-time spending peak right after Katrina has been devastating. Well, without any spending priorities it is hard to answer those charges – perhaps that is why we have no priorities. Interestingly though, despite the Katrina windfall and the fact that we have been in recession our governor has now led us to a new record for revenue and his appetite for more taxpayer funds is unabated!

So we do know that if one is a big government populist there are no spending items that are not fair and I get that. But, to the detriment of our people, the underlying facts that I can state about our current state government are we do not have any discipline and we do not have anyone in leadership who knows how to or, perhaps more sinisterly, even wants to, be a good steward of our taxpayers’ money.

So there it is. Tax reform is nothing but a fight over words. If your side wants to increase spending in an unhindered manner then you scream that the state needs “tax reform.” If your side wants to control spending to reduce tax burdens in an effort to grow our economy then you scream “tax reform.”

That’s clear, right? Any wonder that people like their elected representatives but hate the state government?

When this all heats up in the coming months just remember that it is not about something called “tax reform.” This dispute will be about controlling spending when there is no strategic priority, or not. We can absolutely have “tax reform” that is revenue-neutral, and done correctly it would help grow the economy – and maybe even state revenues along the way. That’s a plan that most citizens and practically all businesses desire, but that is not what the governor and his allies are talking about.

Words can have very different meanings to different people. Let the taxpayer beware!

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