APPEL: Louisiana Can’t Afford To Compromise Anymore

Coming from a state so far behind its peers, one of the most negative terms that I learned in my tenure as a state Senator was compromise.
I know I will be called anti-democratic and all sorts of other things but hear me out.

Over the weekend I attended a wedding in New Orleans.

Of the dozens of people present, it became obvious that virtually none of their children nor of their children’s friends lived in Louisiana anymore, they all had migrated to find their lives elsewhere. I suppose I should have known that, but it was still shocking to perceive the reality of our bad economy.

The tax bills passed in the special session were, in the end, the result of a compromise. Tempered by the need to satisfy special interests, the legislature cobbled together a package that shifted some revenue from income to consumption. That fundamentally was a good thing, consumption taxes (mostly sales taxes) can be largely voluntary. For instance, if because of the new half-cent sales tax increase, one can’t afford to buy something that they want or if their budget won’t allow it, they may have to buy something less or not buy it.

On the other hand, income taxes have a gigantic negative impact on economic growth and investment. In our slow-growth economy, from the poorest to the richest, all personal wealth shrinks, especially because income doesn’t keep up with inflation. Therefore, income taxes assume a prominent role as the limiting factor to breaking the cycle of poverty. Not to belittle those of modest means, but the only way to increase their prosperity, their ability to fully enjoy the product of their labor, is to bolster the economy for all.

But compromise has robbed us of the big prize. Through compromise our legislature has protected so many detrimental giveaways to big industries, oil and gas interests, and others such as Hollywood. These are revenues that could have been used to make the income tax cuts more impactful or, like so many of our competing states have done, even to eliminate it. Compromise granted or extended the same protections to previously untaxed services and trial lawyer jackpots.

Exchanging consumption taxes for eliminating income tax substantially benefits all forms of business, not just the protected ones. Creating a better business climate including no income tax eliminates the need for crony-capitalism by making Louisiana a state viewed as high profit potential for all prosperity driving businesses.

Don’t get me wrong, if the outcome of this session is viewed as a first step, then great strides have been made. If, on the other hand, we look at these results as the end game, then we are doomed to continue bringing up the rear of southern states in economic growth.

As universal prosperity is our goal, we must completely eliminate the drag caused by maintaining an income tax. But we must also present to the business world a new persona, a Louisiana that is open for business. Then over time the prospects of all our people will start to turn upwards.

The upcoming fiscal session will be the next test of our state’s commitment to a vision of prosperity. Reducing wasteful spending by focusing on efficiency and efficacy will free massive resources that can serve as the basis for the next step in eliminating income tax.
That will also serve as notice to the economic world that we are serious about undertaking the changes that we must to attract investment and income growth.

Yes, compromise is the foundation of our American Republic. But compromise in Louisiana has always been tilted in favor of the status quo, never in favor of vision and economic progress. The result was eye opening at the wedding, children leaving because they see no future in their home, a state who is rapidly losing its best and brightest.

For a long time, my personal vision for Louisiana has been simple, within 10 years cut the poverty rate by 25%, within 5 years reverse outmigration. Years of compromises that have overwhelmingly protected the status quo have made my simple goals impossible. If the results of the recent legislative compromises serve as a starting point and not as an end point, then my vision may someday become reality. If not, then the moving companies and airlines will be the great beneficiaries of Louisiana’s folly.

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