The House Ways And Means Committee Just Passed A Rube Goldberg Contraption To Raise Your Taxes

It’s going to the House floor, and it’s widely expected the bill will pass.

A visual representation of the bill, HB 38, complete with a snappy soundtrack, can be found here…

The bill is this – it would raise taxes by $113 million, mostly on upper-income earners who itemize deductions on their taxes, by limiting the setoff on state taxes to just 57 percent of excess federal income tax deductions.

A similar bill went through the Ways and Means Committee last week and was killed on a close 10-9 vote with its chairman, Neil Abramson, providing the decisive vote to kill it. Following that vote, Abramson was brutalized by the Democrat media in the state, including a 1,500-word hit piece from Tyler Bridges in the Baton Rouge Advocate’s Sunday edition and a full-on rectal exam by the execrable Lamar White yesterday in which the author of that blog post apparently went through court records of every legal case Abramson has been involved with in order to look for dirt and decided to inform the public that among the items Abramson included in his home insurance claim following Katrina was the loss of personal grooming products, and in particular cologne.

That’s how bad things got for Abramson, who might be the only Democrat in the House who can reasonably claim to be halfway responsible on tax policy, and naturally he caved under the pressure of having his character assassinated at the semblant direction of the governor and the state party.

So Abramson looked for an escape hatch, and he found one. HB 38, by Democrat Rep. Malinda White, would limit the federal excess deductions just like HB 11, last week’s bill, would have. But while that bill couldn’t get a majority this one can, because an amendment was slapped onto it by Rep. Jim Morris, a Republican, which would keep the bill from going into effect if the Revenue Estimating Conference, that rather incompetent unelected body operating mostly at the direction of the governor which is charged with telling the Legislature what is coming into state government, projects revenues greater than current projections by the $113 million the bill would raise.

And also that the bill would sunset after the 2017 fiscal year, so it would be effective for just two years – the same time frame as the increase in state sales taxes passed in the previous special session. What’s more, whatever taxes would be paid under this bill would be refunded to the taxpayers after that time.

Defenders of this contraption will tell you that in reality it will not go into effect because there will be significantly more tax revenue coming into the treasury than is currently projected and therefore it will be voided. This is quite possibly true; there is a sizable spread, if nothing else, between what the state’s oil revenues are projected to be given a baseline average price of (if we have this correct) $34 per barrel and the $50 or so at which it’s currently trading; for every dollar oil goes up the rule is the state realizes $10-12 million in revenues, so Louisiana could be looking at a good $150-200 million more in revenue than the legislature is currently working with.

But that doesn’t remove the stench from the bill, and the three Republican “yes” votes on the committee – Morris, Chris Broadwater and Stephen Dwight – ought to have known better than to vote for it.

First of all, the Revenue Estimating Conference is not an elected body and thus has no constitutional power to set tax policy. This bill would set the precedent of creating the REC as a tax-writing body. If the words “taxation without representation” ring in your ears thinking about a piece of legislation which makes tax policy dependent on rulings from the REC, you understand what’s at stake here. Anyone in the Legislature who is willing to give the REC the power and responsibility to tax the public is violating their public trust. It’s outrageous that this was even contemplated and if it passes the constitutional precedent it sets is a very, very bad one. Legislators raise taxes, not bureaucrats – and if those legislators want to raise taxes then they damn well had better be willing to take responsibility for doing so. Not putting it off on someone else and having a ready-made scapegoat for their own decisions.

Second, the REC’s history is that it says what the governor wants it to say, and this governor wants to raise taxes and grow government. As such, the REC will meet on July 1 per this bill and come up with all kinds of reasons why revenues can’t be forecast above what they currently are pegged to be and therefore this bill must go into effect. And that will be that; your taxes will go up to support a larger and more expensive state government because some economist at LSU, whose record of forecasting what the state has to spend is pristine in its consistent failure, says so.

Third, if the two-year sunset on this bill actually induces anyone to vote for it you are justified in calling them a rube, and we are justified in calling you a rube if you have any trust that the legislature will honor that sunset. As said above, the sales tax increases passed in the first special session this year will also be sunsetting at the same time, and the spending cuts necessary to balance the budget won’t be any less difficult to make then – meaning that the easiest thing for the legislature to do will¬†simply be to re-up this tax increase.

And finally, if you actually believe that the state is going to refund anyone money under this bill you’re not a rube – you’re insane. There is no reason to think that John Bel Edwards will restrain the growth of state government long enough to have some surplus that can be spent on paying off “rich people” for “favorable tax treatment” given to them by “Bobby Jindal,” and all the reason in the world to believe he will specifically do the opposite.

To the extent this bill’s passage through committee represents some bargain made by members of the committee, or House leadership, with Edwards, it was an incompetent bargain at best. This was a tax increase, poorly disguised through a series of smoke screens laid on as amendments.

One silver lining to this dark cloud was that the bill drew testimony from members of the public who showed up to castigate the committee for even considering it, and unlike the usual performance of civilians who make their way to the legislature this time there was articulate, principled and passionate testimony. We’ll follow up with another post showing some video highlights.

Will the bill pass on the House floor? Word is it’s going there tomorrow. If you want your House representative not to raise your taxes you might want to let him or her know about it.

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