A recent study conducted by two think tanks, the right-leaning Pelican Institute in New Orleans and the Buckeye Institute in Ohio, found the four tax-raising scenarios under consideration by the state Legislature would harm Louisiana by costing jobs and lowering the GDP.
Daniel Ersplaner, chief executive of the Pelican Institute, is urging Louisiana lawmakers to consider the negative impacts of the tax proposals as they head into the special legislative session. In a news release, the nonprofit suggests the tax hikes proposed to help close an estimated $648 million shortfall would cost the state up to 2,800 jobs and drop the state’s GDP by as much as $190 million in the first year alone.
According to the organizations’ study, increasing the sales tax by 0.25 cents or a quarter-penny, one proposed option, would result in the loss of 1,400 jobs and decrease in the state’s GDP by $86 million in the first year. Increasing the sales tax by a half-penny would double those impacts. Asked for comment, the Edwards administration not only disputed it wants “to raise the sales tax”—preferring to reduce it—but added jobs have increased under the current state rate of 5%. The Edwards administration
If lawmakers choose to reduce the 4% tax bracket to $25,000, 2,600 jobs would be lost and the GDP decreased by $191 million while raising $190 million in revenue. Reducing the amount allowable for individual income tax deductions would lead to the loss of 700 jobs and reduce the GDP by $56 million, while raising the same amount in new tax revenue, according to the groups’ study. A spokesperson for Gov. John Bel Edwards said the proposal is not being pushed by the administration.
“We respect the Pelican Institute’s opinion, but their analysis isn’t based in reality and contains more commentary than facts,” said the administration in an emailed comment. “Republicans and Democrats in both the House and Senate have signaled support for stabilizing funding in state government to end the repetitive cycle of fiscal challenges. Gov. Edwards’ plan would result in a tax cut for the people of $400 million and would cut spending by more than $120 million, while still funding health care, education, TOPS and our medical schools.
“The Pelican Institute’s deep-pocketed, out-of-state donors are oblivious to the challenges we face in Louisiana … (and) it’s their inability to compromise or offer any solution of their own that makes them an outlier in these discussions.”