SARGE: Another Inconvenient Truth

I was speaking with a good friend having a specific stake in the way and manner Louisiana conducts business. He’s been planning on building a refinery one day in the company of other fiscally and economically prolific businessmen. He said he’d like to create this economic force of nature in Louisiana but it appeared he’d be going to Texas if the economic growth program in Louisiana didn’t become more business friendly. He said he wanted Louisiana to negate personal income taxes and extra taxes on businesses. Taxes make creating jobs and growing industry nearly impossible.

Louisiana’s leadership is like Nero fiddling while Rome burns. The fact is, as long as Louisiana has state and corporate income tax, we’ll continue losing jobs to Texas. I-10 and I-20 will continue being a “business led, economic evacuation routes”.  I compare these folks to Nero because their obstinate arguing, posturing, and claiming the “moral and economic high-ground” drives industry and jobs from Louisiana.

There are reasons the Louisiana budget suffers an annual shortfall of available funding versus desired spending.  There’s a reason for a $15+ billion shortfall in funding to pay for structural deficiencies on highways and bridges. There’s no viable solution on the horizon to the billions of dollars of unfunded retirement liability now. The reason is INSUFFICIENT GROWTH.

For all the economic illiterates in the legislature I have a news bulletin: if we keep the income tax, things will WORSEN.  They may worsen slowly, but they will steadily and progressively worsen.  Economic growth will continually stagnate as businesses relocate to Texas rather than remain in Louisiana. Revenues will continue their steady and irreversible decline.

The loss of revenue from ending the income tax could mean some deep cuts in government programs targeted mainly at the less economically fortunate; but these effects can be offset. With gradual, necessary wholesale rationalization of government by eliminating antiquated, duplicated and unnecessary programs, and increasing economic efficiency in those programs and agencies left in place, we could experience growth in the economy.  What will also happen is job opportunities could expand after ending the income tax. The rescinding of the tax would make it possible for the able bodied wanting to find a good, paying job.  The best and most effective “anti-poverty program” is an economy with more jobs than potential employees. Virtually nobody works for minimum wage in North Dakota.  That could happen in Louisiana, if our legislators ignore the “poverty pimps” and special interests groups keeping things “as is”.

Our legislature can absolutely keep things as they are today. They can continue imposing the state income tax on its businesses and citizens. But, while it has the power to do this, it can’t force people and companies to stay here and be subjected to taxes making profit less possible.. And, if there isn’t enough tax revenue, NOTHING can help the less fortunate regardless of the legislature’s altruism; no Medicaid, no nothing.

Continuing the state income tax will result in accelerating the advancing deterioration of Louisiana’s revenue streams.  Many pundits condemn the governor for attempting this reform and praised “status quo” interest groups like PAR and CABL for calling for “more study” (code for quietly killing an idea through benign neglect). They also call for “a more slow and deliberate approach to tax reform”.  As usual, the political left likes the income tax. It puts the government in the “wealth re-distribution business”. The left ignores reality, proving once again “denial” is not just a river in Egypt.

It’s time for the legislature to realize an inconvenient truth, which is this: so long as Louisiana has an income tax, people and companies will continue to flee to Texas, Florida, and other states with no income tax. Our economy will continue to be anemic and stagnant. State revenues will continue declining.

The real choice is not whether we end the state income tax or not. The real choice is whether we do it now, or wait and suffer more of the economic decline it’s causing.  The reality is the pain of doing it later will be worse than the inconvenience of simply “sucking it up” and doing it now.

Thanks for listening.

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