Stephen Waguespack, president and CEO of the Louisiana Association of Business and Industry, says it’s time for Louisiana to face a long-avoided truth: The state cannot tax, spend and mandate its way to prosperity.
“For decades, one politician after another has tried every idea under the sun to make the Baton Rouge-heavy, something-for-everyone Huey Long model effective at solving problems and protecting taxpayers. It just won’t work,” Waguespack writes in a column published in LABI’s latest newsletter. “It’s a square peg in a round hole.”
Sending tax dollars to the state capitol each year in the hopes it getting good schools, dependable roads and a stable economy has proven to be “a bankrupt game plan,” he says.
States like Texas, Tennessee and Georgia operate differently than Louisiana, Waguespack says, as they tend to follow a model that keeps taxpayer dollars close to home while counties are tasked with leadership roles and the state capitols assist when needed.
“Basically, every southern state that has economically grown since the tough times of the 1980’s operates differently than we do in Louisiana,” he writes. “We are still trying to put lipstick on the pig created by Huey and enshrined in the Constitution by Edwin.”
The latest edition of the “lipstick,” Waguespack says, is the sweeping tax reform plan unveiled by Gov. John Bel Edwards last week. The proposal will be taken up in the legislative session that begins Monday.
“To raise close to $1 billion in new tax revenue, the governor seeks to impose a new Commercial Activity Tax, which is just that—a tax on all commerce in Louisiana,” he writes. “Also known as a Gross Receipts Tax, it is nearly universally panned as bad for the economy and bad for consumers by national experts on both the left and the right. Only five states levy it, and four states have repealed it in recent years due to the pyramided costs, disincentives to entrepreneurship, and disproportionate harm to in-state small and medium-size companies.”
Waguespack notes the state has lost 25,000 jobs since the recent peak of the economy in 2014. “Employers and families are struggling to stay afloat, but have already paid $1.3 billion more in taxes this year than last year,” he writes. “Does a new $1 billion tax on the economy sound like the right thing to do?”
