Fear Mongering and Tax Hikes in Louisiana

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Posted by Miriam Roff on Wednesday, March 2nd, 2016, 12:59 PM PERMALINK

In an attempt to gain support from Louisiana legislators for the largest tax increase in the state’s history Gov. John Bel Edwards (D- La.) has resorted to fear mongering, holding college football and special needs funding hostage. Unfortunately for taxpayers, it appears to be working.

On Thursday of last week, in the third week of a special session called by Gov. Edwards, the House passed the following tax increases:

  1. 25 percent sales tax increase
  2. Internet Sales Tax
  3. Stores, Vendors Tax Increase
  4. Airbnb Rental Tax
  5. Vendors Must Pay Tax in Advance
  6. Fewer Corporate Tax Deductions
  7. Rental Car Tax Hike

 

The tax hikes proposed by Gov. Edwards would put Louisiana at a greater disadvantage when competing with other states for jobs and investment. While neighboring states, such as Texas and Florida, already have more hospitable business tax climates than Louisiana, are continuing to increase their advantage by enacting further rate-reducing tax reform. Pelican State legislators are moving in the opposite direction by hiking taxes and reducing the job-creating capacity of Louisiana employers.

Louisianans already contend with the third largest combined state and local sales tax in the U.S. at 9.1 percent. If the proposed sales tax increase passes the senate, Louisiana will not only be famous for Mardi Gras and its Cajun cuisine, but also for having the largest sales tax burden in the nation at 10.1 percent. Although this tax was first proposed as temporary—only lasting 18 months— Gov. Edwards is going back on his word, yet again, and is backing a 5 year sales tax boost. It’s crystal clear that the last thing your constituents and the economy needs is an even higher sales tax, as constituents can barely afford to purchase goods as it is.

In addition to raising sales taxes, congressmen are expanding e-commerce taxing authority and raising online sales taxes as well. The proposed legislation hikes online sales taxes that in some localities will also reach close to 10 percent combined state and local tax.  Only small businesses that can prove that they have less than $50,000 in gross receipts for the upcoming year, not profits, will not be liable for the tax. Yet, the small businesses that can afford the tax will operate at a loss.  Collecting taxes on (projected) gross receipts will put small dealers even further in the red.  Even if a business sells less than the $50,000 they will still have to track where a purchase goes and the amount of sales tax collected for Louisiana. These are excessive reporting requirements that expose small businesses to harassment by state and local tax collection authorities.

In a state that relies heavily on the tourism industry, levying a four percent tax on Airbnbs and a three percent tax on rental cars is also bad for the Louisiana economy. Efforts to export the tax burden onto those who cannot vote lawmakers out of office is nothing new. State and local lawmakers try it all the time. This approach, however, backfires, as travel industry taxes, such as those on hotels and rental cars, hurt the local economy and do end up hitting Louisiana taxpayers. Making it increasingly more expensive to experience Jazz Fest, Mardi Gras, and taste jambalaya, will deter tourists from exploring the Sportsman’s Paradise, which would be a huge hit to the local economy.

The Louisiana government has an overspending problem not a revenue problem. Over the last decade Louisiana has spent $185 billion. Had the state kept spending in line with inflation and population growth, the state would have spent over $34 billion less. Rather than further raise taxes on individuals, families, and employers, legislators should make necessary reforms to put state revenues in line with spending without raising taxes further.

After being hit with more than 20 federal tax hikes over the last six years, the last thing Louisiana taxpayers need is to be hit with more tax hikes at the state level.  

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