BOUTERIE: There’s Another Way To Go About An Income Tax Repeal

I am definitely a proponent of eliminating income and corporate taxes.  From a philosophical standpoint, I believe it is none of government’s business to know how much money I or anyone else makes.  I also find it objectionable that government would tax people based on their hard work.

However, I question some logistics and possible implications of a state implementing the current plan put out by the Governor’s people, specifically if we have local businesses and professions working and competing across state lines.  Crossing the border into Mississippi or Texas to avoid paying a 11-12% sales tax in Louisiana is much easier than shipping a good or produce across the Atlantic Ocean to avoid paying any national sales tax if something like the FAIR Tax were implemented by the Feds.

If I’m in Lake Charles and looking to buy big ticket items like computers, furniture, appliances, etc. (LA will still collect on the difference of sales taxes on vehicles purchased in TX if you register the vehicle for LA), it’ll be pretty smart for me to hop in my truck and head over to Beaumont to purchase such items since there would be a difference of almost half in the sales taxes applied.

Looking further at the Governor’s plan, other ways to offset the lost revenues would be repeals of certain credits and exemptions.  I am definitely in favor of doing this to simplify the code and not continue carving out exemptions for every group.

However, there seems to be too much vagueness currently attached to the proposal.  Thus far, in what has been released to the public, items listed to be suddenly subject to sales taxes includes:  “all other miscellaneous professional, scientific and technical services” as a category.

What does this mean?  What other professions could this include?

Looking at my profession, services provided by professional landmen, subjecting our services to a 5.88% state sales tax would put our market from neighboring states, especially Texas.

The Texas Comptroller has ruled that landmen services are NOT subject to state sales taxes.

Regardless of where we reside, many of us typically provide work for clients based in Texas.  We  are also contracted to work in various states.  What would be the implications if suddenly the state demanded we, as self-employed, contract landmen, must collect and pay to the state sales taxes of 5.88% for services provided?

We might be forced with two options if we want to continue working in Louisiana, closer to our families as home:  1)  Attempt to re-negotiate contracts for roughly a 6% increase in day-rates.  2)  Take roughly a 6% hit on income for any work we provide.

There is a 3rd option:  Start working exclusively in Texas and/or other states where such a tax is not imposed, meaning a decision of living in a hotel away from home (and family for many in our profession), or worse, move away from Louisiana all together.

How many different professionals might be faced with similar choices?  Do we want to start another out-migration of Bayou State workers and businesses?

As someone who chooses his profession, I don’t expect special interest consideration in this attempted tax reform.  I am not going to jump up and down and stomp my feet like the film tax credit people.  I am not asking for a tax credit.  What I do hope our Governor and Legislature would do is consider what is done in our neighboring states, especially TX which we should look upon as a great business state, in order not to put our Louisiana-based professionals in various fields, especially those related to some of our most prosperous industries like oil & gas, at a considerable disadvantage.

Keep in mind, it appears for some reason attorneys and their services are currently not listed as being subject to the state sales taxes.  Why would this be?  They generally do not have to compete across state lines for business and contracts like many engineering and technology firms.

Going forward, if we are going to overhaul the tax system in Louisiana, and we likely have just one shot at this in the foreseeable future, why not try to get overall reform?  A simple swap in revenues collected by the state is not going to help the budget fiasco in Baton Rouge one bit.

If we look at Texas, again:  No state income tax.  A sales tax lower (overall state plus local) than what we would be looking at with the Jindal plan.  Higher property taxes.  There must be a trade-off at some point.

Property taxes are higher in Texas due to a much lower exemption on homestead.  But those are tax dollars that remain local, and the local governments there are much more able to fund their own wants/needs rather than having to beg the state.  This is a decentralization of power and tax dollars, something we as conservatives and taxpayers should be in favor of, and government reformers should favor as it would conceivably reduce the amount of vote-buying power during Legislative Session.

YES, we should eliminate the state income and corporate tax in Louisiana.  In order to replace the hole, though, we should first shift the burden of funding local wants and needs more upon the local governments.  Homestead Exemption would need to be addressed at that point to allow said local governments more accessibility to needed funding.  This would be funding that remains in the local parishes and/or communities, closer to the residents from whom the tax dollars were collected.

Afterwards, the state would likely still need to increase sales taxes some in order to assure the current level of funding for real state responsibilities (state roads, Higher Ed., health care), but it would not need as much of an increase as currently being proposed.

Coupling the move towards tax reform with budget reform would establish a much needed comprehensive strategy where we enable the individual worker and small business owner while also giving the taxpayers more control over both their hard-earned income AND more aid in holding their elected officials accountable for the spending of their tax dollars.

Meanwhile, hopefully cautious steps are taken to not discourage our most important industries and professions from growing further in our home state.

Nick Bouterie
Alderman – Town of Iota, Acadia Parish

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