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Reasonable approach to abolish income taxes
 Abolishing all income taxes in Louisiana is a wonderful idea on the surface. Every business in the state and every individual who makes enough money to actually pay state income taxes would benefit from having more money in their own pockets to spend as they saw fit.
Sen. Rob Marionneaux's proposal, though, to do away with all corporate and personal income taxes came out of nowhere in the regular legislative session. It appears the Legislature as a whole as well as Gov. Bobby Jindal are not in the mood to deal with an eventual loss of roughly $3 billion in revenues while there's no game plan on the horizon to deal with it in a realistic manner.
I know what you're thinking. You probably are thinking a $3 billion hit to the state's bottom line isn't such a big deal in light of the state's anticipated $24.9 billion budget for the 2011-2012 fiscal year. The new fiscal year begins July 1.
The $24.9 billion figure is misleading, meaning roughly $17 billion - $18 billion of it is off limits. Those monies are either constitutionally and/or statutorily dedicated or they concern federal funding, and federal funding for states comes with strings attached to it. In other words, states take money from Uncle Sam and Uncle Sam instructs states on how to spend it. No ifs, ands or buts.
That leaves a state like Louisiana with a roughly $7 billion - $8 billion general fund budget. Of that budget, roughly $2 billion will be spent on health care in the new fiscal year. Some $1.2 billion will be appropriated for higher education while roughly $500 million will be dropped on corrections. Meanwhile, the state is constitutionally directed to spend some $3.5 billion on elementary and secondary education. Those are constitutionally dedicated dollars on top of the $17 billion - $18 billion mentioned previously in this offering.
Let's not forget about appropriations for State Police, National Guard, Department of Social Services, Department of Environmental Quality, the TOPS scholarship program, the courts and monies to operate the executive and legislative branches of government. All of them and more draw down general fund dollars each year.
Accordingly, a $3 billion reduction in tax revenues is a big deal when you're dealing with a pot of money that totals $7 billion - $8 billion annually. That's assuming we're not going to tinker with constitutionally and/or statutorily dedicated expenditures.
There's no doubt there exist wasteful spending throughout government at all levels – local, state, federal. There's no doubt as well that government at all levels has grown too big for its britches, so to speak.
When we entertain a proposal, though, to abolish income taxes and reduce tax revenues by $3 billion we must be prepared to cut $3 billion in spending or be prepared to raise taxes elsewhere. Since the general public isn't too hip on raising taxes these days, which arm of government do we cut and how much do we cut from it?
It can be argued within reason that the only real savings to be realized from reducing the size and scope of government must come at the expense of education, corrections and health care. If that's the case, which colleges and universities are we going to close to help offset a $3 billion reduction in tax revenues? Which health care services do we discontinue? How many prisons do we shut down and which prisoners do we set free?
It's safe to assume the general public in Louisiana has no desire to witness the closing of colleges and universities, and no one wants to see anyone do without proper health care. And you can bet a mortgage payment the general public would raise Cane if the state turned prisoners loose to roam the streets freely.
Make no mistake, I welcome the opportunity to pay less taxes, corporate and personal. After all, who doesn't want to a tax cut?
But if we're going to seriously entertain abolishing all income taxes in Louisiana, we must take our time and prepare a realistic and reasonable plan to make it happen without wrecking people's lives. If that means we are to revisit every constitutionally and statutorily dedicated expenditure, so be it. If that means we are to revisit every tax exemption that's made available to the business community and individuals as well, including ending some of those exemptions, so be it. If that means we are to consider other revenue enhancers to offset the loss of revenues from abolishing income taxes, so be it.
Let's put it all on the table – all exemptions, all existing taxes and all existing appropriations. Let's revisit them, alright, but let's do it reasonably and realistically.
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