When a plan, project, or idea is built upon a bad base, it tends to be a little unsteady at best - and a shaky, ready-to-collapse situation at its worst.
The current status of Louisiana’s budget is a prime example of what can happen when a plan - Gov. John Bel Edwards and the cadre of Louisiana’s lawmakers attempt to raise revenues and avoid a fiscal cliff - finds a shaky footing because of a bad base - GDP based on the price of oil; lawfully requiring certain expenditures out of the state budget; limiting the total percent of the budget which can be manipulated to single digits.
The explanation appears the way it does (convoluted) because its just that - a mess.
Rep. Barry Ivey (R-Central) has proposed to rewrite the state’s tax system, which currently ranks as 50th*.
The * means that if the ranking company could find a number lower than 50 to assign to Louisiana’s taxation methods, it would.
Ivey’s proposal is to remove most corporate exemptions, implementing a flat tax for businesses and citizens alike. The Central representative did state that there’s still no definitive answer on how much money the change could raise.
The plan takes some guts, as it flies in the face of recommendations from the Louisiana Economic Development, LABI, and other business advocates who claim that, without exemptions, the edge Louisiana has over other states in regard to drawing employers would dry up.
Perhaps a flat tax on business would help clean up a cumbersome tax code, eliminating one of the major complaints businesses have about the economic landscape in Louisiana?
That outcome is possible, for sure, but what is hard to determine is the reaction businesses will have - which located here due to the exemptions - if those special rules are removed.
Edwards, representatives, and citizens alike have called for large corporations to pay their “fair share” of taxes in this state.
The argument against sudden taxation of these large entities is fear of retaliation. Some large employers will be struck with sudden costs that may cost jobs. Some companies, which considered locating here, may not - costing more jobs.
Jobs provide money to citizens, who then spend that money and pay their taxes.
It’s not hard to see how this plan could be detrimental, especially when Louisiana has lost at least two large employers to Texas due to the... uncertainty of the business climate here.
However, it could be a positive if Louisiana would simply make the shift - pull off the Band-Aid, make a choice and run with it.
But, that has not been the Louisiana way in some time.
The state has had its chances to come together, make adjustments on how it spends money out of its coffers, and find a way to adjust or remove amendments to the Consitution to free up money.
Less than 10% of the Louisiana budget is flexible regarding spending - the rest is set, manipulated only within the box set for it.
How, then, can a citizenship trust its government when it asks an already poor group (Louisiana ranks in the bottom half in the nation in median income) to provide more tax revenue?
The taxation system has to change. The budgetary systems have to change. Not fixed, not adjusted - fundamental change has to come to how dollars and cents are spent out of Baton Rouge.
Change of that magnitude takes leadership, it takes vision - it requires a person to stand up and say “This is how we’re going to do it.”
Otherwise, the waffling state will continue to lose large opportunities to other groups that can say “This is how we do it, come try it out.”