Jim Beam column:Tax breaks hard to eliminate
Louisiana legislators love to give tax exemptions. The state gave away $7.5 billion of those exemptions in 2023, according to the latest figures available.
The Advocate sized the situation up well when it said the state gave away $1 in exemptions for every $2 it collected in fiscal year 2023. While giving away $7.5 billion, the state collected $12.5 billion in taxes.
The Legislature had some success in curbing those exemptions when it held a tax reform special last November, but that has been rare in recent years. The newspaper said it repealed the Quality Jobs Program and Enterprise Zone exemptions.
Legislators reduced the cap on tax credits it gives for movie and TV productions from $180 million to $125 million per year and for investments in historic properties from $125 million to $85 million.
In 2023, the state raised $4.5 billion in sales taxes, but it gave away $3.3 billion in exemptions. It sounds almost unbelievable, but the state had 218 state sales tax exemptions totaling $1.7 billion.
The state had 95 individual income tax exemptions totaling $1.6 billion. It had 60 corporate income tax exemptions totaling $1.8 billion.
Susan Bourgeois, secretary of Louisiana Economic Development, in an interview told The Advocate that investors care most about lower tax rates. A tax incentive, she added, 'closes deals, it doesn't get us deals.'
While that is true, legislators still love to sponsor tax exemptions. During the current fiscal session, legislators have proposed over 70 new tax breaks.
The newspaper said they insist new tax breaks or expansion of existing ones creates jobs and investment. State Rep. Les Farnum, R-Sulphur, doesn't buy that argument.
'Tax credits are the reason we're in the shape we're in financially,' Farnum said. He is a member of the House Ways and Means Committee that handles exemptions and Farnum in an interview said, 'We give away so much money. We have a host of brand new requests every year.'
Thanks to the late-Rep. Vic Stelly, an independent from Moss Bluff, there are some tax breaks that benefit all citizens. A sales tax exemption for food purchased for home consumption totaled $584.5 million in 2023. An exemption for residential utilities totaled $251.3 million. And an exemption for prescription medications totaled $405.8 million.
The $1.24 billion exempted for those three when they were approved in 2002 were paid for with higher state income taxes. Unfortunately, the Legislature reduced the income taxes in 2008 and the state experienced almost eight years of severe budget crunches.
The late-Gov. Mike Foster called the Stelly Plan one of the most beneficial tax reform plans passed in many years. The three special exemptions are in the state constitution and the state's voters are unlikely to ever remove them from that special protection. The income tax that was raised in 2002 wasn't protected.
The Advocate said the Tax Exemption Budget from the Louisiana Department of Revenue shows that legislators over the years have legalized a total of 564 tax breaks in the form of exemptions, deductions and exclusions from sales, income, corporate franchise and user fee taxes.
The newspaper said Gov. Jeff Landry and legislators at last year's third special session had some luck ending or reducing tax exemptions. They want to continue to wipe out exemptions, but it's never easy.
Former state Sen. JP Morrell, who is now president of the New Orleans City Council, in an interview during last year's tax reform session, said, 'We were unable (in 2017) to get traction. Every (tax break) constituency showed up, and they got to one or two legislators' to protect their favored tax breaks.
Former state Rep. Julie Stokes, R-Kenner, tried to end some sales tax exemptions as chair of a special committee to do it, but legislators refused to support the effort.
Judging from tax exemptions that were ended or reduced during last November's special session, legislators may finally be ready to end some of the costly tax breaks. However, we won't get a final answer until we see what happens to the 70 tax break bills that were filed for the current legislative session.
Louisiana has the highest combined state and local sales tax in the country, so it's definitely time to end a large chunk of those existing 218 sales tax exemptions and lower sales taxes.
Jim Beam, the retired editor of the American Press, has covered people and politics for more than six decades. Contact him at 337-515-8871 or jim.beam.press@gmail.com. Reply Forward
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