By John Maginnis
As the state awaits the release of Gov. Bobby Jindal’s grand tax swap plan, his press office is in campaign mode, responding rapidly to any discouraging words, particularly those spread in the media. Deputy communications director Michael Reed, in fact, was hard at work Sunday morning ferreting out perceived skepticism and innuendo in the daily prints regarding the tax plan and the state’s economic performance.
Two back-to-back email messages in my inbox entitled “Setting the Record Straight” were not duplicates, but separate records in need of straightening.
The first email detected “a skeptical view” in a Baton Rouge Advocate story toward the Tax Foundation’s state business climate rankings, which the governor seeks for Louisiana to boost by eliminating its personal and corporate income taxes. Thus, the press officer cited an array of other statistics from other sources to underscore how Louisiana would benefit from repealing its income taxes.
The second email found fault with a Gannett News column that stated while Louisiana has “supposedly” created thousands of jobs, some “wonder where they are.” To set that record straight, Deputy Reed listed a half-dozen facts attesting to Louisiana’s lowest unemployment rate in the South, as well as its above-average growth in jobs, population, net in-migration and personal income.
Those two straightened records, set side by side, though impressive, do raise the question: if the Louisiana economy is doing so swimmingly under Gov. Jindal, why, instead of tweaking what already is working, are we contemplating radical surgery on state tax policy? Can the tax system be so bad for an economy that the facts show to be humming?
There is always room for improvement, of course. Yet the governor may need a stronger rationale when he presents his plan to legislators, who are taking their own skeptical view of what increases in sales and other taxes would be required to fill the $3 billion revenue hole left by the income tax repeal.
For the record then, the press office refers to a report in Forbes Magazine that the nine states without an income tax had 50 percent greater economic growth between 1998 and 2008 than the nine states with the highest income tax rates. It also cited a recent Wall Street Journal story that said states without an income tax experienced significantly more growth in jobs than the rest of the country over the last 10 years. The same story pointed to a 58 percent higher population growth in states without the income tax compared to the national average in the last decade.
Those are interesting comparisons, but some will want to know how the Louisiana economy stacks up against the rest of the country and those states without income taxes. Well, according to the press office’s other email, Louisiana’s unemployment rate “has remained below that of the South and the U.S. every month since the beginning of the national recession.”
The press office is too modest. According to the Bureau of Labor Statistics, Louisiana ’s 5.6 percent jobless rate in December 2012 was tied for 12th lowest nationally, lower than seven of nine states without income taxes, including Texas (16th), Tennessee (32nd) and Florida (33rd).
On per capita personal income, the press office points to Louisiana’s leap from 45th in 2000 to 28th in 2011, its highest ranking “in more than 80 years.” Left unsaid is that we are hard on the heels of Florida (27th) and Texas (26th).
Job growth? Says the press office, “Louisiana is one of only six states that have seen employment gains since January 2008.” More recently, however, the rest of the country has caught up some. From 2011 to 2012, the BLS ranks Louisiana 26th in job growth, but ahead of Florida (28th) and just behind Tennessee (23rd). Curiously, of the top 10 job growth states in that period, only one, mighty Texas (4th), has no income tax.
One can throw statistics and rankings back and forth all day, and Gov. Jindal, no doubt, has a few more up his sleeve. But clearly, it is a combination of factors that determine a state’s economic well-being, and tax policy, while important, is not always the prime driver.
So when the governor goes before the Legislature this spring, it will be hard for him to argue that the state’s economy can only thrive by the massive overhaul of its tax system—lest his press office sets the record straight on him.
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