Letter: Tax plan would aid Louisiana

After $6 trillion in deficit spending to “stimulate” the economy, median family income in the United States is down 5.6 percent since the Obama “recovery” began. Moreover, there is little chance that the policies favored by the present administration will provide much relief in the foreseeable future. Therefore, the states had best look to their own interests.

Gov. Bobby Jindal has made economic growth in Louisiana a chief objective of his stewardship. Whereas governors of the past were more satisfied with caretaking, demagoguery or redistribution, Jindal seems willing to think “outside the box.” He professes a plan to promote economic growth in Louisiana, and it is increasingly apparent that tax reform is central to his strategy. Because details are scarce, it is too early to pass judgment on the adequacy, equity and appropriateness of the governor’s plan. But it is not too soon to assess his underlying strategy. There are elements of tax reform that have been ignored up until now:

The bigger picture was outlined recently by Arthur Laffer and Stephen Moore in the Wall Street Journal “The Red-State Path to Prosperity,” printed on Marh 27. Laffer and Moore note that recent low-tax, business-friendly states in the Southeast and Sun Belt have been attracting businesses and residents away from states implementing the Obama model of raising taxes on business and the wealthy to fund government “investment” and union power.

Laffer and Moore speculate that within a decade, five or six states in Dixie could entirely eliminate their income taxes. Florida, Texas and Tennessee already have. If our neighbors follow suit, the area from Florida through Texas could become a vast income-tax-free zone. Combined with the natural advantage of climate and the predominance of right-to-work legislation, the impact on regional economic growth could be stupendous.

Moreover, if there is a domino effect, as Laffer and Moore anticipate, the consequences for Louisiana could be disastrous if it remains aloof while its neighbors jump on the tax-reform bandwagon. Georgia illustrates the dilemma.

How long can Georgia sustain its 6 percent income tax if businesses and residents can hop across the border to neighboring no-income-tax states like Florida, Tennessee or (prospectively) South Carolina? Could Louisiana sustain its income tax if Arkansas, Mississippi and Alabama embraced tax reform and we did not?

If we are to prosper, we must think of tax reform not merely as a domestic issue but as a regional issue. The time for tax reform in Louisiana may be nigh. We are blessed with more natural resources than our sister states who must face similar issues. We should be able to work out the details so that the poor and vulnerable are protected as we strive to promote economic growth for all residents.

Robert Hebert

economist

Baton Rouge