Bayou Business Review, 5/4/98, p.26
The fiscal session of the Louisiana State Legislature is in full swing. You have been forewarned! Guard your property, your liberty, and your life. The legislators are dangerous not because they are out to swindle us, but because they are trying to help us and just don’t seem to know any better. To paraphrase Twain: "It could probably be shown by facts and figures that there is no distinctly naive class in Louisiana except its legislature." Consider the following:
Sen. Jim Cox (D-Lake Charles) has a bill that would adjust the state’s 10-year property-tax exemption on new plants by the number of jobs that are created. Sounds good at first. More jobs mean lower business taxes under Cox’s plan.
Let’s add one more piece of information. Basic economic theory (supported by numerous studies) tells us that when there is a lower ratio of jobs to capital (plant and equipment), wages are higher. The only thing we can conclude is that Cox’s plan would encourage the creation of low-paying jobs in Louisiana and discourage high-paying jobs. Is that the kind of growth our legislation should encourage?
Shouldn’t our lawmakers study the effects of some suggested cure before writing out a prescription, especially when it involves the futures of more than 4 million people?
Sen. John Hainkel, Jr. (R-New Orleans) has once again proposed that (St. Charles Parish’s tax receipts from Entergy’s Taft Nuclear plant be divided among the local governments in Entergy’s service area. His reasoning is that the tax is really passed on to customers, and so these other jurisdictions should have a share of these tax revenues.
The simple fact is that all business taxes are passed forward or back to people, mostly to customers, but sometimes to workers and to shareholders.
Do I even have to point out that having my city or parish get revenues that I am paying is not the same as me getting those funds and then choosing to have those funds taxed away by my local government?
If the legislature wishes to make the burden of past mistakes fall on Entergy’s shareholders instead of its customers, all they have to do is pass a law deregulating electricity, allowing other power generation facilities to compete with Entergy’s nuclear plant.
Worst of all, if Orleans and Jefferson try to share in St. Charles’ tax revenues, they are only inviting St. Charles, Tangipahoa and others to raid their tax bases. Many of us do some shopping in Jefferson Parish or go out once in a while to the French Quarter, and pay high taxes. Does Jefferson and Orleans want to share their tax receipts with Lafourche or Terrebonne?
Still, the worst idea goes to Sen. Foster Cambell (D-Elm Grove) who once again has introduced a bill to tax all oil, natural gas and other hydrocarbons as they are processed or moved in the state, as opposed to when they are removed from the ground, as current law stipulates. This bill, backed by Sen. Jim Cox (D-Lake Charles) and Sen. Don Cravins (D-Lafayette), would tax oil and gas that are produced in Louisiana and produced in foreign lands and seas.
Again, it sounds great, "tax imported oil." There is one little catch: Louisiana is not the only place where foreign oil can be refined. If we put a tax on processing oil and gas in Louisiana, it will get processed somewhere else, Texas, Mississippi, or maybe Arkansas, costing Louisiana some of its highest paying jobs.
Of course, our legislators are not about to be cast in some remake of "Dumb and Dumber." The Hainkel bill and the Campbell bill have been filed—and rejected—before. Common sense has prevailed, so far. But seeing these bills filed and re-filed sure makes the nerves jitter.
For some hope about our legislature, click here to see the column I wrote for the following issue.