KOENIG: Louisiana Doesn’t Need Nelson’s Tax Plan

The Louisiana economy has lagged behind its neighbors for a long time. Eight years of poor economic policies under former Governor John Bel Edwards put Louisiana at a severe disadvantage when it came to reaping the windfalls from the recent economic boom in the Sun Belt.

One of the major roadblocks in Louisiana’s economic development has certainly been the state’s tax system. According to the Tax Foundation, Louisiana currently holds the nation’s highest average sales tax rate at over 9.5%. On top of Louisiana’s sales tax, we also have an income tax—unlike nearby states like Florida, Texas, and Tennessee.

Due to Louisiana’s lagging business development, some public officials have called for changing Louisiana’s tax system–including the Secretary of the LA Department of Revenue Richard Nelson. In fact, Nelson previewed his tax reform plan to the Louisiana House Ways and Means committee earlier this week.

The Sadvocate summarized part of Nelson’s plan in an article this week:

It won’t be easy.

That was the clear takeaway from a legislative committee hearing Wednesday where Revenue Secretary Richard Nelson began the public effort of trying to sell a tax plan which Gov. Jeff Landry hopes state lawmakers will approve during a special session that he wants to call in November …

Nelson and Landry would like legislators to collapse Louisiana’s graduated income tax structure into a single flat rate both for corporate and individual taxes. He believes that would make Louisiana a more attractive place to live and invest in, especially compared to other Southern states …

It would be a popular move, giving a tax cut to virtually all taxpayers, as described by Nelson to members of the House Ways and Means and Senate Revenue & Fiscal Affairs committees at the Capitol.

But paying for the tax cut would require legislators to take unpopular moves to eliminate tax breaks and extend the sales tax to services that go untaxed today. That’s the part posing political problems.

Of course, the Sadvocate didn’t write the most accurate article about Nelson’s tax plan. His plan is NOT a tax cut. It’s a mixed bag that lowers taxes for some people and raises taxes for others.

To be fair, there are a few decent proposals in the plan–such as potentially eliminating the wasteful film and TV tax credit. But on the other hand, his plan won’t even phase out Louisiana’s personal state income tax. Nelson is now supporting a flat state income tax.

We all know that Nelson publicly supported abolishing Louisiana’s state income tax during his failed gubernatorial run last year. It took Nelson only nine months of “serving” in the state government to completely flip-flop on his positions. Here we have another example of a wannabe politician saying one thing on the campaign trail while doing the opposite of what he promised.

Fortunately, attorney Paul Hurd has already penned an article here on The Hayride in July about Richard Nelson’s potential tax plan. Hurd already was sounding the alarm about it before pretty much anyone else, and he deserves credit for his proactivity.

As more information has come out about Nelson’s terrible plan, it becomes clearer and clearer that it is even worse than I had anticipated.

In essence, Nelson’s plan will harm some of the only good-paying jobs left in Louisiana: the professional services sector. Nelson’s “brilliant” idea is to levy a sales tax on the gross charges of professional service workers.

What are the consequences of Nelson’s new potential tax? Well, it’s going to hurt the average Louisiana citizen–who is already suffering from “Biden-flation” over the past three years.

Need to hire a CPA to do your taxes? Nelson’s tax will make that service more expensive. Need to hire a lawyer to navigate Louisiana business environment? Nelson just made that service more expensive too. Are you considering a new building for your Church? Nelson just made the architect fees significantly more expensive.

We get the point.

Nelson has long claimed to be a proponent of fiscal responsibility. But in his last year as legislator, he voted for a massive pork-filled state budget in the 2023 legislative session:

Nelson, who calls himself a “bipartisan” state representative, talks a big game about fiscal responsibility and bad government policies. So then, what was Nelson’s vote on the pork-filled House Bill 560 that showered tens of millions of dollars upon Democrat districts? Oh wait, he voted YES. Not to mention, he also voted in favor of Senate Continuing Resolution 3–which busted the State budget spending cap and unleashed ruinous, wasteful pet project spending on Louisiana (including $1.5 million for Sen. Cleo Fields’ pet project, the Louisiana Leadership Institute, and a $250,000 splurge for band uniforms for Southern University). If Nelson couldn’t stand firm on these irresponsible bills, then can you really depend on him as your Governor? The answer is pretty clear here. Again, look at Nelson’s actions over his cute messaging.

Let’s not forget that Richard Nelson specifically does not care for Jeff Landry’s voters. He publicly dumped on Landry’s voters during Nelson’s failed gubernatorial run last year:

A year later, Landry inexplicably tapped Nelson as the Secretary of the Louisiana Department of Revenue. Now, Nelson is looking to raise taxes on Louisiana service professionals, Great, it’s just another example of Landry’s poor personnel choices for his administration.

This whole situation goes back to the failed constitutional convention earlier this year. Landry could not convince the state legislature to move forward with a constitutional convention this year. We needed a “con con” to allow the Legislature to cut more state government spending, but Senate President Cameron Henry stalled Rep, Beaullieu’s constitutional convention bill (HB 800) during the regular session.

Landry and his allies know that Louisiana is likely facing a fiscal deficit in the state government’s budget next year. With little ability to cut the state government’s budget due to constitutional constraints, Landry is possibly leaning on Nelson to raise Louisiana’s tax revenues in the coming years.

As many of the writers here on The Hayride have pointed out, Louisiana does not have a tax revenue issue. Our state government has a spending problem. Our state budget keeps going up every year while the state’s population goes down every year. Our state tax dollars continue to be spent on wasteful pet projects while public officials continue to tell us about a “fiscal cliff” in the next state budget.

Louisiana does not need Richard Nelson’s tax plan. We need public officials who are willing to tackle the real issue in the Louisiana state government: wasteful government spending.

If you want to learn more about Nelson’s tax plan, then make sure to check out Paul Hurd’s recent appearance on The State of Freedom podcast.

If you want your legislator to oppose Nelson’s tax plan, then make sure to email your legislator using the Call to Action link here.

Nathan Koenig is a frequent contributor to RVIVR.com, a national conservative political site affiliated with The Hayride. Follow his writing on the Louisiana First Standard Substack, on Twitter (X) @LAFirstStandard, on Tik Tok @la.first.standard & on Instagram @lafirststandard. Email him here: louisianafirststandard@proton.me

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