I’ve been contacted by various constituents and interested parties about this Together Louisiana video released earlier this month purporting to explain why Louisiana is poor.
If you haven’t seen it, here it is…
Here is my short take on this complicated issue. Although the video puts forth some facts that are true and it perhaps highlights why Louisiana’s Industrial Tax Exemption Program (the “ITEP”) should be reformed it misses the mark and makes a gigantic leap jumping over basic economics and logic to try and causally tie Louisiana’s poverty to low property taxes for industrial companies.
Let’s get this straight: We are not poor because we don’t tax enough…states and regions don’t tax themselves into prosperity.
There are a multitude of social and historical causes for our poverty about which treatises could be written. But simply raising taxes by a billion dollars in the handful of parishes that have most of the industrial plants is a terrible idea. More importantly it won’t fix the problem and would probably make it worse. No economist except the most radical leftist ones would suggest eliminating the ITEP would eliminate or even reduce poverty.
The leftist group Together Louisiana which put the slick video together leaves out as many facts as it puts in. It compares Exxon Mobil’s refinery in Baton Rouge with its refinery in Baytown, Texas and points out that the ITEP exemption in Louisiana is much more generous…which is true. But it leaves out the fact that Texas gets the bulk of its revenues for schools, police and firefighters from local property taxes and thus does not have an income tax on individuals and a small convoluted franchise tax on business.
Louisiana, on the other hand, provides the bulk of the operating cost for schools at the state level along with a lot of state support for law enforcement, district attorneys, the court system and firefighters.
And Texas has had its problems with using property taxes for schools. It faced years of litigation to resolve the discrepancy between poor and wealthy counties and zip codes.
Am I suggesting that the ITEP doesn’t need reforming? No, it certainly does as most economic development experts will concede if only in private.
But how? That’s the multi-billion dollar question.
My opinion? We MUST provide an exemption for the extraordinary capital investment made by the petrochemical industry. It’s too important for our state economy not to. And there needs to be statewide consistency in granting the exemptions.
But the exemptions don’t need to be 99.9% and all the revenue shouldn’t flow into just a handful of parishes. And it should be noted that the ITEP is an “incentive;” accordingly, return on investment and jobs created and kept needs to be a factor.
Maybe some of the new revenue from reforms could go into infrastructure which many in the business world (particularly the big businesses) say we need. It shouldn’t be just the commuters going to work and parents taking their kids to school that should pay the costs to improve infrastructure that the big companies want.
And schools? Yes, education is critical to improving the cycle of poverty. And more money can help and we do need to pay teachers a competitive salary. But we aren’t at the bottom of school rankings because we spend the least. Because we don’t spend the least. We are right in the middle among the 50 states with respect to spending per student….so throwing money at a system that absorbs much of the money in overhead isn’t going to solve the issue.
The bottom line: Together Louisiana let its left-leaning anti-business ideology lead it to a produce a video that, because of its false premise (that we are poor because we don’t tax enough) will hurt the cause of a fair-and-balanced, but pro-business reform of the ITEP.
Rep. Jay Morris is a member of the Louisiana House of Representatives from the Monroe area.