Go ahead, blame Gov. John Bel Edwards for creating the mess that’s become of the Industrial Tax Exemption Program. Scream whatever obscenities you like at Together Baton Rouge, the left-leaning group that’s hell-bent on making ExxonMobil the poster child for everything it believes is wrong with this property-tax-waiving incentive. And, if it feels good, take whatever shots you like at the East Baton Rouge Parish Public School Board—and especially Republican David Tatman—for having the audacity to just say no to Exxon’s most recent ITEP requests.
Then, once everyone is done casting aspersions, bemoaning big industry’s apocalyptic death and twisting the truth for maximum political benefit—especially as it relates to what Texas does and does not do—can we get serious about the actual problem?
Louisiana’s ridiculously byzantine tax code.
Why, you might ask, do we have something so complicated and so obtuse that it takes a flotilla of CPAs and tax attorneys to solve?
The easy answer, of course, is welcome to Louisiana.
The actual answer: I haven’t got a clue.
But why let facts get in the way of a good column.
I suspect our tax code, thanks to the joys of Huey Long-style populism, began as rather unkind to big business and the “fat cats” at Standard Oil, which today is a little outfit I like to call ExxonMobil. Somewhere along the way—as Long’s influence began to fade, the political power of industry began to rise and private-sector unions got neutered—the decision was made that business-friendly was a good thing.
Unfortunately, instead of revamping how and what taxes are paid, these elected creatures—craving nothing more than re-election and addicted to the money-doling influence of lobbyists—began selectively tinkering with the system over several decades, creating a tax break here, passing an exemption there and sprinkling in a tax credit or two for good measure. Toss in our obsession with having an effective corporate tax rate equal to that of Texas and the result is the disaster that exists today.
This much is fact: A tax system made reasonably fair only through gimmicks and special-interest-inspired adjustments is policy that’s neither fair nor reasonable.
What’s worse, everyone skulking around the State Capitol—from the governor on down—knows we have a Houston-sized problem but all of them lack the courage to actually do their job. And consider this: There are at least two already-crafted tax overhaul plans collecting dust in some closet that these folks simply choose to ignore.
They know how to spend our money for these studies, but, clearly, there’s a problem implementing these studies. And, to paraphrase Jerry Seinfeld, that’s really the most important part of the study—the implementing. Anybody can just study stuff.
Given our love affair of the compare-and-contrast with Texas, let’s make life easy for everyone by simply stealing their tax code. Seriously, have you ever heard anyone in Louisiana say a negative word about the joy of how Texas collects taxes?
Hell, even the Baton Rouge Area Chamber and Together Baton Rouge—which agree on pretty much nada—routinely quote Texas when hurling invectives at one another.
No matter what this banana republic does, government doesn’t need to be in the business of picking economic winners, or deciding what industries deserve special attention. What government should be doing is creating a playing field and tax system that’s simple and fair for everyone—especially those who really take risk, like entrepreneurs and small business owners.
Speaking of Long’s crusade against Standard Oil, Together Baton Rouge—and its campaign against ExxonMobil and demands for wage equality—has effectively risen to fill the void some 40-plus years after the annihilation of unions by the petrochemical and industrial construction industries in the mid-1970s and early ’80s. Since those unbridled days of optimism, when Ronald Reagan’s trickle-down economic theories were all the rage, there’s been little in Louisiana standing in the way of big industry, other than some pesky federal clean-air regulations and way too many lawsuit-happy trial attorneys.
No doubt, there are scores upon scores of corporate welfare programs that need to go away—especially if Louisiana ever gets around to implementing modern-day tax policies. ITEP, however, is not one of them.
With the massive capital investments made regularly by industrial manufacturers, ITEP is a critically important program for states like Louisiana and Texas, where the vast majority of these behemoths reside in the United States.
What would be wise, however, is to amend the program by simply removing any education-related taxes from the equation. In fact, that should pretty much be standard operating procedure for any tax break concocted by our elected puppets—and the lobbyists who pull their strings.
That said, and despite what BRAC, LABI or anyone else might say, ITEP is hardly the economic panacea for all that ails the Baton Rouge economy. The fate of ITEP had exactly zero to do with Georgia-Pacific, BASF and Thompson Pipe Group each deciding this month to either shutter, relocate or downsize its workforce, costing nearly 1,000 friends and neighbors their jobs.
Edwards is right when he says it’s wrong for state government to deny local governments a voice in the waiving of its property tax dollars. For years, a semi-retired former LABI executive has been bemoaning the billions of state dollars that annually flow to municipal governments, declaring the ending of this practice would forever solve Louisiana’s fiscal woes. He may well be right, but the argument cuts both ways: The state also can’t decide what local tax dollars are worthy of a giveaway.
Not even the sainted Texas and its version of ITEP does that.
Together Baton Rouge is also right when it says not every dollar spent by ExxonMobil or any other industrial manufacturer needs to be exempted from taxes—no matter how important their economic might. At some point, actual job creation—and not simply the magic multiplier invented by economists—has to matter.
As for Tatman … well … he’s just wrong.
With that out of the way, it’s time for the governor and state legislators to stop with the band-aids and epoxy and start with the overhauling of Louisiana’s tax code.
Let’s begin by asking ourselves, “What would Texas do?”