The Louisiana legislature is in the midst of a special session called by Governor John Bel Edwards (D- La.) to address a projected $600 million shortfall for the next fiscal year, which begins at the end of the month. Just three months after he signed into law a $1.2 billion tax hike, Gov. Edwards is looking for more hard-earned income from Pelican State taxpayers and plans to hold funding for education programs and health care programs hostage unless his demands for further tax hikes are met.
As lawmakers in Louisiana are laying on the tax increases, lawmakers in neighboring states—Texas, Tennessee, Florida, North Carolina, Mississippi, and Arkansas—have moved in the opposite direction by enacting major tax reform packages over the last few years.
The question is not whether the Louisiana legislature will pass a second round of tax hikes this year, but by how much and which taxes they will raise. Senate President John Alario thinks the state needs an additional $450 in revenue, whereas the house so far has only agreed to raise taxes by $222 million.
Yet, one thing is clear this special session: Louisiana lawmakers are going to expand the scope and size of government and make it even harder for Louisiana to compete with neighboring states for employers and new residents. The following bills approved by the senate yesterday – House Bill 38, House Bill 35, Senate Bill 6, and Senate Bill 10— have set this stage.
Tennessee and Mississippi are the latest of the southern states to jump on the rate reducing income tax cut bandwagon. This legislative session Tennessee became a true no-income tax state by fully phasing out its Hall Tax and Mississippi set the stage for fully phasing out its Franchise-Tax over the next decade. According to the non-partisan Tax Foundation, by eliminating the Hall Tax, Tennessee propelled itself forward from being 15th best in the nation for business tax climate to 11th best.
North Carolina lawmakers also understand the importance of good, efficient tax policy. Legislators reduced income taxes in 2013 and 2015, which improved their business tax climate ranking from 44th worst in the nation to 16th best and are not going to stop. This session they plan to pass further tax relief.
Even Arkansas recognizes the importance of smart tax policy, as last year they enacted income tax relief.
And lastly, it should come as no surprise that Texas and Florida vie for being number one in job creation, as Gov. Rick Scott (R- Fla.) has publicly stated that he wants to beat the Lone Star State in job growth. Who could blame him? Both states house some of the best business tax climates in the nation. According to the non-partisan Tax Foundation, in 2016 Texas had the 10th best business tax climate in the nation and Florida had the 4th best. Furthermore both states do not rest on their laurels and continue to look for ways to improve their tax code. Just last year, Texas Gov. Greg Abbott (R) enacted further rate reducing tax reform by passing $4 billion in tax cuts on businesses and property owners. Last year Florida Gov. Rick Scott (R) also passed $428.9 million in tax cuts and this year he passed a tax relief package totaling close to a half billion dollars for this session.
All of these states are ready to welcome Pelican State businesses and jobs with open arms for example, take Gov. Rick Scott.
“As Governor Edwards continues to rally behind tax increases and bad business policies, we stand ready to help Louisiana companies grow and create jobs in Florida,” Scott said in announcing his trade mission. “Florida has added over one million new jobs and our job growth rate is growing almost 60 percent faster than the national average. Many Louisianans already vacation in Florida, and they will save more of their money by moving their businesses to our state.”
Louisiana lawmakers are just digging the state into a deeper hole by enacting bad tax policy. While these ill thought out policies will be a boon for states like Texas, Tennessee, Florida, North Carolina, Mississippi, and Arkansas, they will be disastrous for Louisianans who will see an exodus of jobs and businesses.