Friday, April 12, 2013

Advice … and a warning

Posted By on Fri, Apr 12, 2013 at 11:44 AM

A lot of folks can take credit for convincing Gov. Bobby Jindal to “park” his much-maligned “tax reform” plan last week, none more so than Dan Juneau, president of the Louisiana Association of Business and Industry (LABI). In the Capitol’s pack of lobbying hounds, LABI is The Big Dog — particularly on tax matters.

Jindal’s proposed tax-swap plan was already on life support even before LABI pulled the plug on it on March 27. When the state’s leading business lobby announced its opposition to any plan that would increase the tax burden on businesses (which Team Jindal admitted the plan would do), the patient was officially dead.

Or was it?

Jindal is still prodding lawmakers to eliminate the individual income tax. He just isn’t offering any advice as to how to do it.

As Juneau noted in his latest weekly column, the governor’s latest move actually exposes his true objective: eliminating the individual income tax at any cost. There’s danger in that.

Juneau has led LABI for decades. He has seen — and supported — many attempts at tax reform. His column offers some “unsolicited advice” to lawmakers. They should take it.

I’ve been around this process almost as long as Juneau. I’m quoting his advice below — and adding a warning of what will happen if that advice is not heeded.

“1. Do not attempt tax reform in times of uncertain revenues or budget crises. Tax reform is best done when budget surpluses are occurring and revenues are on a sustained growth curve. A high degree of revenue certainty makes taxpayers and government service recipients more tolerant of experiments with the tax code. That is certainly not the case at the moment.

“2. Before embarking on a tax reform mission, gather hard, verifiable data about the current tax system and any variants that may be proposed. Share that information with potential proponents and opponents of the reforms. Be totally transparent and honest about the numbers at every step of the process. …

“3. Pitch a big tent and bring every potential stakeholder inside of it early on in the process. If the meetings get heated, so much the better. Let everyone have input and let everyone, not just a select few, have an opportunity to shape the proposal. …

“4. Do not rush the process. Develop a well-constructed proposal and spend the amount of time necessary selling it to what will likely be a skeptical public. Take constructive criticism and modify the proposal according to that input.

“5. Get as many stakeholders as possible to literally sign on to the proposal. Show broad-based support and use that support network to sell the plan.”

Juneau notes that “several of those steps were missing” from Jindal’s proposal. He’s being kind. All of them were missing. This is the wrong time; too few people crafted the plan; Jindal tried to rush it through; and too few “stakeholders” actually signed on.

Now Jindal has punted “tax reform” to lawmakers. In doing so, he has discarded the parts of his plan that actually made sense — lowering business taxes (which LABI didn’t even ask for), raising the cigarette tax, and streamlining sales tax reporting and collections. Now, all Jindal wants is a bill that will eliminate individual income taxes — even if it’s not “revenue neutral.”

Which brings me to my warning: If lawmakers fail to heed Juneau’s advice, they are going to create more problems than they solve. Truth is, Louisiana’s income tax is not what’s “broken.” What’s broken is a revenue stream for higher education and health care.

So what should lawmakers do?

Stick to what they know works — and solve the real problem. Here’s how:

• Focus on the budget. That’s the real problem.

• Raise the cigarette tax by at least $1 a pack, and dedicate all additional revenue to health care and higher education.

• Convert all “tax reform” bills to study resolutions. Spend the summer and fall gathering ideas and hard data — with lots of public input.

• Call a special session next spring to address tax reform.

• Make sure all proposals are publicized well in advance.

And remember: rushing “reform” always creates more problems than it solves.

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As the state legislature convened April 8, Gov. Bobby Jindal abruptly shelved his proposed tax plan. Was that the right thing to do?

  • Yes, bad plan
  • No, he caved
  • Support just wasn't there

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