Look at tax excemptions
Published 7:00 am Friday, March 11, 2016
We have a small reason to celebrate after the close of the special session Wednesday.
Not only did our parish manage to keep its state ag offices and its hospital, but state lawmakers beat back entreaties from LABI, the Louisiana Association of Business and Industry’s suggestion to raise the sales tax by 2 cents while keeping business and industry taxes low. It’s no surprise that a business-lobbying group would put business interests before the interests of families, but it is nice that lawmakers were determined to “spread the pain around,” as it were.
Second, I’m happy the state raised cigarette and alcohol tax rates. As I have said in the past, it seems fairer to add taxes to things we don’t really need. Speaking of such things, I was surprised as anyone to learn there’s no sales tax on Mardi Gras beads.
Tax exceptions for groceries, and especially medicine, which is already quite expensive, are sensible. But Mardi Gras beads?
It turns out, we have quite a few tax exemptions in Louisiana. For example, the farm equipment sold to farms or farmers is tax-exempt. Fertilizer is tax-exempt. The film industry gets hundreds of millions in tax exemptions, and on and on. According to a 2013-2014 tax exemption analysis by the state that’s available online, the state (at least then) gave away $2 billion in tax exemptions from corporations while collecting less than $500 million. And this is only one small category of exemptions. The annual document, called “The Tax Exemption Budget,” runs over 400 pages and contains plenty more giveaways.
Now, LABI and others will argue that lowering corporate taxes helps create jobs and brings in industry, never mind that this hasn’t worked yet in Louisiana. But let’s consider corporate taxes another way.
Mardi Gras beads and throws aren’t currently taxed, but local governments around the state do make some effort to pick them up and clean up their streets. In other words, the government spends money on a thing it gets no income from. So, the government can either tax something else to raise the revenue necessary to clean up the streets or it can leave the wreckage from Mardi Gras on the ground.
We reasonably expect our local and state governments to keep our air clean, to keep our streets clean and to make sure the poorest among us are kept healthy and fed well enough so that they may make a contribution to the workforce.
Yet, looking at the state’s tax revenues, it’s clear a good portion of the money that’s used for the public good comes not from the businesses and industries that are the root cause of these problems. Some would call this freeloading, or deep corporate welfare.
Call it what you will, but it’s time our legislators took a close look the tax exemptions. If the products and services truly cost the state nothing (as in, charity sales) then those exemptions should remain. But if the state is paying to clean up and repair messes leftover by tax-exempt entities or products, than it seems only fair that the state should require those entities to pay a fair share of taxes.
Critics will point out that businesses will only pass those costs on to the consumers. This is unlikely for a number of reasons, but it’s worth pointing out the fact that by being exempted from taxes, a good number of these businesses already are, in effect, passing off their costs to the rest of us, whether we buy their goods and services or not.
Jesse Wright is the managing editor for The Daily News. You can email him at firstname.lastname@example.org, or call him at (985) 732-2565, ext. 301.