WATERLOO: John Bel’s Crazy CAT Tax Is Dead

Rep. Sam Jones, who agreed to shoulder the burden of the unpalatable and unpassable HB 628, pulled the bill before the House Ways & Means Committee got a chance to vote it into oblivion. In doing so, he saved the Democrat members – Joseph Bouie, Jimmy Harris, Marcus Hunter, Ted James, Robert Johnson and Major Thibaut – the embarrassment of choosing between voting opposite their party’s governor and being on the wrong side of a lopsided vote over an unpopular tax. Thibaut was highly unlikely to vote for it, just like the committee’s chairman Neil Abramson was. Abramson is a decent bet to switch parties and run as a Republican for the Senate seat Conrad Appel currently holds; he knows he couldn’t win if he backed this cockamamie tax plan.

So the centerpiece of John Bel Edwards’ legislative agenda is off the table just two weeks after the session began. It’s the end of the governor’s world…and the Pelican Institute feels fine. A press release…

The Pelican Institute, Louisiana’s premier voice for free markets, today applauded the decision to withdraw the commercial activity tax (CAT) from consideration.   The CAT would have been devastating to the state’s economy.

“The Pelican Institute joined with our partners at The Buckeye Institute’s Economic Research Center to provide policymakers with a timely analysis of the disastrous effects the CAT would have on Louisiana.  Today, the right decision was made for the state’s future and for its citizens, and we are gratified that our warnings of the disastrous impact the CAT would have had were heeded.  The proposed commercial activity tax would have led to significant job loss for Louisiana, higher prices for consumers, and would have hurt average citizens the most,” said Abhay Patel, acting Executive Director for the Pelican Institute.

The Pelican Institute will release a detailed study produced in partnership with The Buckeye Institute’s Economic Research Center later this week.  The Buckeye Institute employs a more reliable, dynamic scoring model to test more than a dozen possible changes to Louisiana’s tax policy and show their effects on gross domestic product, jobs creation or loss, and revenue.  The new study found that the CAT proposal would have led to the loss of more than 11,000 existing and potential Louisiana jobs in its first year alone and a decline in the state’s economy of more than $100 million.

“We in Ohio have seen the negative impact the CAT can have, and as I said when Louisiana’s proposal was unveiled, it is unclear why any state would want to import this type of plan,” said Robert Alt, President and Chief Executive Officer at The Buckeye Institute.  “There is a reason why only five states continue to impose this type of tax burden and why two of those five – Texas and Virginia – are looking to eliminate it.”

Orphe Pierre Divounguy, the lead economist with Buckeye’s Economic Research Center and the lead author on the forthcoming report said, “Given the negative impact on wages, and employment prospects, the CAT would have done more harm to Louisiana’s economy and its citizens than good.  The static scoring used by Louisiana’s Department of Revenue does not take into account how the real world reacts to changes in tax policy and overestimates revenues that can be raised.”

Pelican, which is undergoing a bit of a transition in the wake of its founder Kevin Kane’s death late last year, did some solid work in bringing the tax experts from the Buckeye Institute in Ohio to put some numbers behind the argument against Edwards’ tax plan. We wanted to include them in this post because those efforts went a long way toward squelching any momentum this stupid tax hike might have had. All of the state’s business groups were also in the fight to kill it, as was the Louisiana chapter of Americans For Prosperity, but this victory marked the return of Pelican to the forum in a significant way.

We need a lot more of that. Here’s to Patel, whom our readers might remember from his long-shot Senate bid last year, and his people, and here’s hoping we see a lot more of them in the coming debate.

UPDATE: Another conservative organization which fought to kill the CAT tax was Truth In Politics, and today its executive director Kelli Bottger did a little touchdown dance as well…

“Not only was the roll-out of this legislation completely botched, but the tax itself is a bad idea. The Governor has continually demonstrated a complete disregard for how Louisiana’s economy works. This failed European-style tax model would have been a death-blow to our already struggling economy, which is why Louisianan’s overwhelmingly opposed this radical new tax plan.

Adding to this is the fact that in TIP’s recent poll of Louisianans from across the state, nearly half of all respondents strongly opposed establishing the CAT, and more than 61 percent strongly opposed it when informed of the potential economic impact and job loss that could result from its implementation. When referring to Gov. Edwards’ proposed 2018 budget, nearly 80 percent of those polled said the state government already taxes and spends too much revenue. Local and national media also chimed in with criticisms of the CAT, including Forbes, which quoted many top economists as calling the proposal ‘terrible,’ ‘misguided’ and ‘the most harmful’ form of taxation.

Every day, more Louisianans are becoming aware of how Gov. Edwards’ failed leadership and economic policies are hurting our state. It is time for the governor and his administration to listen to the people and put this awful, burdensome tax to bed for good.”

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