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Jindal should not support tax hike on businesses
Gov. Bobby Jindal and many lawmakers have promised to oppose tax increases in the legislative session. If so, they should abandon efforts that would raise the homestead exemption and result in the largest tax hike on Louisiana businesses in decades.
In a move that surprised even the measure's sponsors, the governor is backing House Bill 485, which would perennially raise the $75,000 homestead exemption to adjust it for inflation.
That would lower taxes for some homeowners -- no doubt a popular idea. But it would also threaten basic services provided by local governments and shift a higher proportion of the tax burden to businesses. Those changes would make it harder for Louisiana to attract good jobs and for its residents to enjoy a good quality of life.
Louisiana's homestead exemption is already the nation's largest, fully covering half of all state homeowners. Thus, Louisianians pay the nation's 46th lowest property taxes per-capita, according to U.S. Census data.
That has left businesses paying a disproportionally high share of property taxes, more than 80 percent last year. Only nine states in the nation had a higher tax burden on business.
Proponents of raising the exemption say tying it to inflation guarantees small increases each time, giving governments a chance to cut expenses to make up for lost revenue. But do they seriously expect politicians to cut expenses every time inflation pushes the exemption up? Governments are more likely to raise millage rates on those still paying taxes, mostly businesses.
Besides, those small increases on the exemption would quickly add up. If it had been tied to inflation when it was set at $75,000 in 1982, the exemption would now be over $165,000 -- placing an enormous burden on taxpayers not covered by it.
All this explains why proponents of HB 485 were surprised Gov. Jindal's backing. The governor, after all, has eloquently argued for lowering business taxes to foster growth. He led important efforts last year to end taxes on business utilities and accelerate the phase out of two other business taxes.
But if the homestead exemption is tied to inflation, in only a few years the increases in business property taxes will far exceed savings from the tax changes Gov. Jindal advocated last year. The Louisiana Business Association of Business and Industry has estimated the homestead exemption's increase would quickly become the largest business tax hike since the early 1980s.
As he tries to recruit new businesses, Gov. Jindal is surely aware of what's at stake. He should, then, withdraw his support from this harmful proposal -- and use his power to defeat it.
--The (New Orleans) Times-Picayune |
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