By Robert Mann
It’s one thing to say taxes are too high. That’s a subjective judgment dependent on what you believe the government should provide. It’s quite another thing to argue tax increases always destroy jobs or that tax cuts reliably create more of them.
If you make that assertion, you should have more evidence than faith. Unfortunately, those pitching tax cuts as an elixir for state economies are selling snake oil.
The perennial struggle over taxes is now playing out in Baton Rouge. In particular, legislators are debating Gov. John Bel Edwards’ plan (the centerpiece of which is dead) to reform Louisiana’s antiquated tax system and replace the $1.4 billion in temporary tax increases lawmakers passed last year.
Opponents — mostly Republicans — object to any tax increase, especially on business. Unfortunately, the governor’s ill-fated plan conflicted with two tenets of Republican orthodoxy: Tax increases are always bad, but business taxes are even worse because they kill jobs.
“If the business community is forced to pay additional taxes to maintain the current or even higher levels of government spending,” the Louisiana Association of Business and Industry (LABI) asserts, “we will have fewer resources available in the private sector to continue to create jobs, invest new capital in our businesses, and make the other necessary investments for them to grow and expand the private sector.”
One problem with this tax phobia is that GOP ideology about raising revenue keeps crashing into reality. Maybe Louisiana Republicans and LABI suffer from short-term memory loss. It wasn’t long ago that lawmakers slashed personal income taxes by $800 million a year and showered businesses with billions in credits and exemptions.
Did I miss the unprecedented economic boom that blessed our state? Last I looked, we had the nation’s fourth-highest jobless rate — 5.7 percent.
So, is Louisiana’s high unemployment caused by excessive business taxation? Probably not. In fact, of the 12 states with the highest business taxes, all but Alaska (which, like us, suffers from low oil prices) have lower unemployment rates than Louisiana.
The jobless rates in some of these high-tax states are much lower than Louisiana’s. For example, Iowa has the highest corporate tax in the country — a top rate of 12 percent compared to Louisiana’s 8 percent — but its 3.1 percent unemployment rate is almost half Louisiana’s and the eighth-lowest in the nation.
Continue reading on NOLA.com at this link.