Our lightweight governor John Bel Edwards is set to give a speech tonight about the state’s budget problems. We learned yesterday that the state is in a recession and Edwards will publicly ask for tax increases.
Among those tax increases our lightweight in chief will ask for is a “clean penny” sales tax increase. It’s “clean” because it has no exemptions except for food and prescription drugs, which are required exemptions by the Louisiana Constitution.
If you want to encourage an economic activity, you tax it less. If you increase the costs of an economic activity, you will get less of it. That’s why tax increases never generate the revenue they are supposed to. This is why John Bel’s tax increase will not generate the revenue it is supposed to.
Even worse for John Bel, he won’t like this advice a financial planner gave to WAFB.
“Groceries and prescriptions,” said Evans Financial Group Financial Planner Brandon Beck. “That’s all fine and good, but I think that they’re trying to jostle these expenses to cover prior commitments.”
Should the sales tax hike be approved, Beck said the best plan for people is to spend less and save more.
“To do the un-American thing and spend below your means is always going to be the best bet,” he said.
As the price of things go up, people will buy less of them. This is basic ECON 101.
Louisiana is not going to tax its way out of this recession, we’re going to have to grow our way out of it. We need comprehensive tax and spending reform. We need to reduce the size of state government and establishing priorities.