Jones, a Democrat from Franklin who’s pals with the governor and was in fact his seat-mate in the House of Representatives before John Bel Edwards was elected governor, just filed HB638, which would extend the current state sales tax rates for the next five years.
Those rates make the average combined sales tax rate, when state and local taxes are added together, 9.98 percent. That’s the highest in the country.
Interestingly enough, Republican state legislators we’ve talked to say they get close to zero constituent calls complaining about the sales tax being what it is, and most of them feel like rather than give Edwards the $900 million tax increase he wants by agreeing to this cockamamie, shot-in-the-dark gross receipts tax he’s pushing they’d just as soon extend the sales tax as is until 2020, get Edwards out of the governor’s mansion in the 2019 elections, and push through a comprehensive tax reform package along with a constitutional convention and a complete revamp of the state’s budget with a new governor in 2020.
Meaning that Jones’ idea, at least partially and in principle, could actually have some bipartisan support. While Republicans aren’t getting calls about the sales tax, there is no question Democrats are getting those calls. That’s the reason Edwards is newly babbling about how businesses in Louisiana don’t pay enough in taxes as part of his messaging about gross receipts – or, as he calls it, the Commercial Activity Tax.
As an aside, remember the old line about “whatever you tax you’ll get less of?” With that in mind, a commercial activity tax is less desirable than Edwards might think.
In any event, with that as background along comes Jones with a proposal to extend the sales tax rates for five years. And Jones, who is also the author of the bill that would institute the cockamamie, shot-in-the-dark Commercial Activity Tax on Edwards’ behalf, denies this sales tax bill comes out of any coordination with the governor.
“That’s just me,” he told the Baton Rouge Advocate. “I’m just putting as many things as possible on the table before the (filing) deadline,” which is Wednesday. “I don’t have an appetite for it. But we work within the framework of time and structure. I just felt it necessary to put it in there.”
AFP Louisiana, who is pushing the Republicans in the legislature to let the Edwards sales tax increase die next year and force the governor to accept some sizable budget cuts, didn’t buy a word of that. Director John Kay put out a forcible statement demanding Jones’ bill go in the round file…
“Extending the additional sales tax on Louisianans is bad policy. AFP Louisiana warned one year ago that this would be more than a short-term tax. We urge the legislature to prove us wrong by disposing of HB 638 by Representative Sam Jones immediately.”
“This is bad policy in any year. But it is an especially bad policy when Louisiana finds itself in the midst of a jobs recession. This state cannot afford to continue having the highest sales tax in the nation. The legislature must focus its efforts on the budget, starting with eliminating all budget growth from last fiscal year.”
And our friend Jeff Sadow had nothing but raspberry to blow in Jones’ and Edwards’ direction…
We must take that assertion with a grain of salt. Dozens of bills already existed addressing sales tax, many by Democrats, who would not have minded an amendment like this if and when the need arose. Nor must a commander give a direct order for his subordinates to intuit a course of action. No; this comes precisely because Edwards has realized the need for it has arisen, in a form most easily controlled by him.
The need for it has arisen because Edwards knows the front end of his tax-and-spend agenda is going nowhere, and he needs to salvage the back side of it. His plan has three components: (1) an essentially revenue-neutral trade of lower individual income tax rates for eliminating the federal income tax deduction, (2) making permanent reductions in or eliminating tax exceptions now while starting a slow process of sloughing off the corporate franchise tax over an extended period, and (3) swapping out the fifth cent of sales tax for a gross receipts tax (which he calls a “Corporate Activity Tax”) on most business entities.
It all hinges on the fifth penny, so to abandon that means he has lost faith that the CAT will make it into law. He has plenty of reason to think so; when your chief bootlicker Republican Sen. Pres. John Alario expresses doubt about your legislation, you know it’s in trouble. Even more telling: Jones also carries HB 628, the CAT legislation.
Sadow thinks Jones’ professed independence is bovine scatology largely because if Edwards really does have to face a “fiscal cliff” next year it will lay bare a complete inability to govern, and he’s going to have a fairly unsolvable political dilemma on his hands…
And if forced to head in the direction of retaining the sales tax increase to pay for big government, he’ll write off support from that nontrivial part of [the middle-class Edwards-voting] segment of the electorate, making his reelection nearly impossible. It even could get worse: if he does move to this fallback position and the Republican-controlled Legislature defeats that, then he’ll be on the hook for supporting a measure viewed negatively by those necessary for his reelection yet failing to bring the benefits of the extra revenues state government could deliver to them and other client groups in his coalition.
Having to make this move at this time with Edwards’ implicit endorsement indicates his governorship has come to a major inflection point. And that the opportunity for him to secure reelection continues to wither away.
As an element of negotiation, this comes off as an exceedingly terrible course of action. Edwards came into office threatening that he’d have to kill college football across the state if he didn’t get massive tax increases, and he got them – on a temporary basis, and in a fashion which hurts his own voters far more than those of his political opponents. Now he’s in a position where the legislature can simply kill any attempts he wants to make to alleviate that suffering or, more to the point, inflict it on somebody else, and bring him to a choice: accept that he can’t fix the harm he’s caused to his own people, or be forced into admitting his inability to govern by making a billion-dollar budget cut he refused to make in 2016 when he took office.
Either choice damages him, and with increasing evidence that Texas is killing Louisiana in competition for industrial and commercial economic development he’s running out of opportunities to prove he can successfully run this state.
And given the arrogant and underhanded way in which he’s dealt with the Republicans in the legislature, and particularly the House, the governor will be hard put to find anyone willing to bail him out of his troubles in that body’s majority.