Last Modified: Friday, June 08, 2012 6:03 PM
Gov. Bobby Jindal and the Louisiana Legislature have made little progress in making the state more business-friendly, according to a report from the Tax Foundation, a nonpartisan group in Washington, D. C.
The report shows the state has a long way to go in that category of tax policy.
According the report, Louisiana ranks 32nd out of the 50 states for having a business-friendly tax climate. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property.
Surrounding states rank as follows: Texas (9th), Arkansas (31st) and Mississippi (17th).
One of the problems could be in the recent legislative session Gov. Bobby Jindal and the Louisiana Legislature have taken the “politically easiest” route of raising revenue, and that is using “one-time-money,” rather than making the really hard decisions about cutting out wasteful spending or raising taxes. There can be no doubt that “slush funds” still exist for legislators which fund things that should be funded from the local level, if at all.
Jindal said, “. . .Louisiana now has one of the best business climates in the country, more people are working in Louisiana than ever before, and our unemployment rate has outperformed the national and southern economies every month since January 2008.”
It is hard to see how ranking 32nd makes Louisiana one of the best business climates in the nation. Both Texas and Mississippi have substantially better rankings than Louisiana, according to the Tax Foundation. Louisiana ranked 33rd before Jindal became governor. That’s hardly improvement. It is more like standing still and not making meaningful change.
Jan Moller, Louisiana Budget Project Director, a “progressive” non-profit group, seized upon the Tax Foundation report to say Louisiana’s “anemic” tax collections, second lowest in growth rate the country, show that the state is headed in the wrong direction.
But why is having a high tax growth rate a measure of good tax policy? Apparently the Louisiana Budget Project equates a high-growth rate in collecting taxes with good tax policy. States like California and Illinois have tried to get out of their budget woes by continually raising taxes, and that certainly hasn’t helped them. Experience shows raising taxes rather than promoting a healthy business tax climate causes a continual economic death spiral.
Louisiana does need to make a better effort to make sure the tax credits to new businesses are really paying off in the way of jobs and benefits they bring to the state. There needs to be more accountability and real consequences for new businesses that don’t live up to their side of the bargain.
While it may hurt state pride a little, why not try to model more of what our good neighbor Texas is doing to rank 9th in business climate? We certainly don’t want Texas’ high property taxes, but we should take a closer look at the way they tax business. Obviously it is not magic, but it probably would take more political courage than is currently being exhibited by Jindal and the Legislature.
This editorial was written by a member of the American Press Editorial Board. Its content reflects the collaborative opinion of the Board, whose members include Bobby Dower, Ken Stickney, Jim Beam, Dennis Spears, Crystal Stevenson and Donna Price.