“Beauty is in the eye of the beholder.” Those words were never so true as when spoken in the context of politics. In my years in office, I saw some really ugly things that others thought, or at least said they thought, were gorgeous!
Perhaps my favorite example of duplicity in meaning, as related to politics, is tax reform. No expression means so much to so many but has been used by different power structures within government to achieve so many unrelated ends. Let us talk about a few examples.
From the perspective of an old-school Louisiana populist politician such as Governor Edwards, tax reform means any modifications of taxes that ensures that in the end there is more domestically produced income taken in by government to be spent by the politician, ultimately abetting his political career. The downside to citizens is that most of this income is disposable, and as populist government takes ever more of it, those who earned it are deprived of the benefit of their labor and entrepreneurship.
Much like the Senators of ancient Rome, modern populists thrive on power, and that power derives from their command of resource-devouring government structures and a plethora of monetary and non-monetary goodies for them to hand out to voters. In Louisiana, the Governor loves it when efforts are undertaken for tax reform because he knows that in all our history every effort at tax reform has invariably ended up generating far more revenues for the state than taxpayers would have been willing to support through other political means. Populist politics thrives on cash, and tax reform has proven to be a painless path for politicians of all stripes to increase the burden on citizens without citizens ever realizing it.
Another approach to tax reform is a tool of the far left. Though Louisiana’s political makeup has over the past decades become far more conservative, there is still a strong bloc of far-left social-equity Democrats. The concept of tax reform to them is far more sinister than it is to conventional populists. In their view tax reform is a euphemism for the chance to expand wealth transfer. Far-left political philosophy ignores the reality of economic law and assumes that the lower income strata exists because society is fundamentally unfair. Therefore, to them, the only way to create “equity” is to empower government to literally take wealth through taxes from those who have earned it and transfer it through expensive government programs and direct payments to those who, for whatever reason, are less fortunate.
This is a classic differentiation – really the basis of modern American politics – between the liberal worship of outcomes versus the conservative belief in opportunities. To liberals, the purported end game for tax reform is the use of government power to un-naturally equalize wealth in society as measured by outcome metrics. To a conservative the path to increased wealth is through the creation of opportunities for all to engage in meaningful economic endeavors, especially good paying jobs.
The fatal flaw in far-left logic is that it ignores the truism that solely because of constitutionally-defined limits on government power is our society prosperous beyond measure in human history. But in politics logic does not count for much. The far left hides its intentions by appealing to the fundamental fairness of Louisiana’s people; by using unrequited fear of the majority and blind jealousy of those better off to build political power within its base and through the media.
Ironically, to maintain itself in power the left’s strategies willingly sacrifices opportunities for prosperity growth for everyone, including its own adherents. And their political tool of choice? The use of Legislative bloc voting to force compromise favorable to them though damaging to the state.
Another view of tax reform emanates from well-intentioned citizens. To the average good government, reform-minded business or civic person, tax reform means trying to improve the state’s economic realty by incremental adjustments of tax structures. Such efforts crop up at every fiscal session, but again Louisiana’s nagging political history gets in the way. Invariably the populists and the far left take advantage of these efforts, rendering their impact on Louisiana’s economy neutral at best. But worse perhaps, because of the strength of the business lobby, whole industries use the opportunity to create special breaks for themselves, leaving those that remain to shoulder increasing tax burdens. This crony capitalism is anti-growth and hurts the state’s image immeasurably.
There has never been any implemented over-arching state vision, so incremental tax reform efforts devolve into legislative brawls, from only which the strongest benefit. Incremental efforts are doomed to fail because they operate in the vacuum of our visionless leadership lacking high-level strategy and overall priority.
A costly outcome of years of failing to address the totality of the state’s fiscal and governance structure head on has led to an overdependence on incredibly expensive incentives to attract business. Instead of facing up to the fundamentals that make us uncompetitive with other states, incremental efforts, especially in tax reform, always seem to end up doing more harm to state competitiveness. Instead of leading toward a better economic climate our politicians chose the less painful approach and build on incentive dependency.
Do you wonder why Louisiana has no automotive plants? Simple, it’s our politics. We let Louisiana populism and left-wing politics that thrive on incremental efforts at change block fundamental reforms that would make us appealing to a car company, or any company whose sole goal is creating profits.
My final view of tax reform is the untried but elsewhere extraordinarily successful, pro-growth version. The goal of such reform is to create a pro-growth economy that would create wealth for all the people and as an aside generate more revenue for government than any of the other concepts. This approach is best defined by another old expression, “A rising tide lifts all ships.”
If our tax structure allows for better jobs generating higher disposable income for all our people but some make more than others, so what. If businesses are attracted by no income tax, so what. Our vision should be for a tax structure where economic growth and prosperity for all is the rule, not the exception.
To achieve meaningful wealth enhancement for all our people, we must abandon populism, wealth sharing, and incremental adjustments to tax policy. Then we can adopt fundamental policies that have created the great economic booms we see today in Florida, Tennessee, and Texas. From a political perspective, this would not simply be tax reform, we would be undertaking political power reform. That is because when we take away the fiscal tools of the political status quo, we take away the control and faux moral authority of all those who have promised so much but have delivered so little.
As sure as the spring, there will be a new Legislative fiscal session. And with it will come the usual call for incremental tax reform. But as we all know, even if for the good of the whole, no power structures are ever willing to rescind their own power, power that is based on purse strings. Therefore, as history is prologue, we should expect that some incremental elements of tax reform will pass, but be assured it will do so because the established power structures will have created something highly beneficial to themselves. And the result? Small benefits to citizens and businesses, but more benefits for special interests, more taxes, bigger government, and more money to sustain the political power.
Well intentioned efforts at tax reform have no practical chance at success until we unseat the established power that thrives on the status quo. So, do not be fooled by the upcoming talk about tax reform. It does not mean the same things to the different political players, except as it respects their own shared interests. If tax reform passes in some form and it is signed by the Governor, it will only be because it benefits him and those entrenched others who benefit from it.
Louisiana cannot ever achieve growth and prosperity if we continue to try to just tweak our political and fiscal constructs. We will never change until we have leadership with a strong vision and a willingness to overcome the status quo, leadership that governs accordingly. We are naïve if we believe that it can be otherwise!