An eye-popping $4.6 billion annual price tag for phasing out completely the state income tax suggests how ridiculous the notion is. Another piece of evidence: the cuts and dubious revenue sources in the state budget now under consideration by the Legislature for the new fiscal year beginning July 1.
The combination of the two data points makes it more than unreasonable to push any kind of income tax repeal this year.
The Legislative Fiscal Office looked at House Bill 271, one of several tax code bills currently stalled — thank goodness — in the Ways and Means Committee. Sponsored by state Rep. Hunter Greene, R-Baton Rouge, the legislation would begin to phase out income tax on Jan. 1. The tax would be eliminated entirely for the 2023 tax year, costing the estimated $4.6 billion a year.
For the coming fiscal year, state revenue would be reduced by $78 million.
Where in Gov. Bobby Jindal’s precariously balanced budget proposal that kind of money can be found is almost a joke in itself. The Jindal budget is already a miracle of improvisation, and not in a good way. It is filled with one-time sources of money and anticipated revenues of various kinds, such as sales of state property or transfers from this fund or that. And as numerous experts suggest, the operating budget isn’t going to look better in the next year or so either.
So perhaps lawmakers could postpone the phase-out of the income tax. Perhaps Jindal was joking when he suggested that it begin in fiscal year 2016 — not coincidentally, about the time he leaves office.
It wouldn’t be a joke to Jindal’s successor. If fully implemented, in the fiscal office’s estimate of the impact of the Greene bill would be a loss of $4.6 billion in tax revenues — about half of the general fund that pays for health care and education.
One of the old hands in the State Capitol is Dan Juneau, retiring as head of the Louisiana Association of Business and Industry.
One of his parting bits of advice: “Do not attempt tax reform in times of uncertain revenues or budget crises.” Juneau told readers of his regular newspaper column that, to put it mildly, the fiscal atmosphere today isn’t conducive to the tax discussion.
“Tax reform is best done when budget surpluses are occurring and revenues are on a sustained growth curve.” Juneau said. “A high degree of revenue certainty makes taxpayers and government service recipients more tolerant of experiments with the tax code.”
The phase-out proposals are not simply experiments, because that word suggests some doubt whether the results would be good or bad. Only bad news can be expected from an all-out assault on the income tax base for state government.
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