Louisiana Voice

Last March, Piyush Jindal’s alter-ego Timmy Teepell (or would it be the other way around?) was a guest on the Jim Engster’s Show on Baton Rouge’s public radio station WRKF and in the course of that interview he denied any knowledge of the American Legislative Exchange Council’s (ALEC) agenda.

Another guest on Engster’s show, Public Service Commission Chairman Foster Campbell, this week took Jindal, the legislature and the entire Louisiana congressional delegation to task for not displaying sufficient backbone to back Jindal down on his proposals to eliminate the personal and corporate income taxes in favor of a 3 cent state sales tax increase.

Campbell instead called for the passage of a 3 percent processing tax on oil and gas which he said would generate $3 billion a year “and let the people who can afford a tax pay it.”

When one reads ALEC’s 5th anniversary edition of Rich States, Poor States http://www.alec.org/publications/rich-states-poor-states/, one has to wonder at the veracity of Teepell’s claim. The annual report devotes 15 of its 125 pages to demonstrating how bad personal income taxes for states’ economies—and that’s before it even gets to the five-page chapter entitled Policy #1: The Personal Income Tax.

Even after that chapter, state personal income taxes are mentioned at least once on 64 of the next 75 pages.

Likewise, corporate income taxes are also discussed on 10 separate pages before Policy #2: The Corporate Income Tax, another five-page chapter. Corporate income taxes are then mentioned on 56 of the remaining 80 pages.

As if that were not enough, Rich States, Poor States also zeroes in on its favorite tax, the sales tax. “We find that sales taxes have a neutral effect on state economies and therefore are a far preferable means for a state to raise needed revenue,” it said in the first paragraph of Policy #3, entitled (you guessed it) The Sales Tax.

In all, sales taxes are invoked on no fewer than 74 of the 125-page report which boasts that ALEC’s tax and fiscal policy is “to prioritize government spending, to lower the overall tax burden, to enhance transparency of government operations, and to develop sound, free-market tax and fiscal policy.”

And Teepell is unaware of this agenda. Really?

“When policymakers choose the levels and types of taxes for their state, they must confront not only the possible effects on the state economy, but the volatility of tax receipts as well,” the report says. “When tax receipts are volatile, that usually means an abnormally large shortfall of revenues when times are tough and spending needs are the greatest.”

Incredibly, the report claims that revenue generated from sales taxes “is the least affected by the boom and bust cycle—in fact, sales tax revenue changes only half as much as revenue from personal and corporate income taxes do.

“Not only does the sales tax do less to inhibit growth, it is a steady revenue source even during a recession,” says the report.

Then, ripping a page right of the Milton Friedman playbook, the report says, “Progressive corporate and personal income taxes do far more damage to the economy than do other taxes such as sales taxes, property taxes and severance taxes. In addition, they (income taxes) are substantially less reliable than those other taxes. How’s that for sound tax policy?”

Well, certainly inflicting a regressive sales tax on Louisiana’s poor is considerably more reliable than corporate income taxes when one considers all the tax breaks, exemptions and rebates this administration hands out to the tune of about $5 billion a year to corporate contributors.

But to address the sophomoric question, “How’s that for sound tax policy?” we turn to another publication entitled Selling Snake Oil to the States: The American Legislative Exchange Council’s Flawed Prescriptions for Prosperity.

A joint publication of Good Jobs First and The Iowa Policy Project, The November Snake Oil report takes ALEC to task for its Rich States, Poor States publication which, as might be expected, is heavily weighted in favor of its corporate membership.

“We conclude that the evidence cited to support Rich States, Poor States’ policy menu ranges from deeply flawed to non-existent,” Snake Oil says. “Subjected to scrutiny, these policies are revealed to explain nothing about why some states have created more jobs or enjoyed higher income growth than others over the past five years.

“In actuality, Rich States, Poor States provides a recipe for economic inequality, wage suppression and stagnant incomes and for depriving state and local governments of the revenue needed to maintain the public infrastructure and education systems that are true foundations of long term economic growth and shared prosperity,” it said.

The Snake Oil report said that results actually reflect just the opposite of the ALEC claims. “The more a state’s policies mirrored the ALEC low-tax/regressive taxation/limited government agenda, the lower the median family income; this is true for every year from 2007 through 2011.”

Jindal was elected in 2007 and took office in 2008 and his policies, Teepell’s denial notwithstanding, have certainly mirrored the ALEC low-tax/regressive taxation/limited government agenda and the state’s infrastructure and education systems just as certainly have suffered under staggering budgetary cuts.

Louisiana’s average median household income of $42,423 for 2010 was the nation’s 10th lowest and 29 percent of Louisiana’s children live in poverty, second only to Mississippi’s 32 percent.

The state’s working poor already pay little or no income tax, so elimination of the state income tax would have no effect on them. A sales tax increase, however, would hit the poor the hardest because they would be paying the same taxes on diapers, clothing, cars, gasoline, appliances and automobiles as the wealthy. Accordingly, they would be paying a much larger percentage of their income in sales taxes than higher income families.

Campbell, a former state senator and an unsuccessful candidate for governor in 2007, was elected chairman of the Public Service Commission last year.

Accustomed to being a political lightning rod for his candor, Campbell was in rare form on Engster’s show on Tuesday, saying that Jindal typically works for the benefit of big companies and corporations. “He’ll do anything he can to help those at the top end of the income bracket.”

Appearing to consciously avoid referring to Jindal as governor, he said, “Mr. Jindal knows the solution. When I ran for governor, I wanted to get rid of the income tax which I still think we ought to do. Progressive states like Florida and Tennessee don’t have state income taxes and neither does Texas. They seem to be doing better than us. But you have to replace it with something and Mr. Jindal knows what to replace it with but you couldn’t get him close to it.

“Mr. Jindal wouldn’t touch the oil companies and that’s where to get the money. We just need some politicians with some plain old-fashioned guts to ask ‘em to pay their fair share. I’ve never seen anyone stand up to the oil companies. We don’t have a congressman who’ll do it. Mary Landrieu won’t do it. David Vitter is joined at the hip with them and he absolutely won’t do it.

“Mr. Jindal would run out of the Capitol screaming if you asked him to touch Exxon with a tax,” Campbell said.

Campbell, a Democrat, then heaped praise on Louisiana’s first Republican governor since Reconstruction.

“The most honest governor by far, who tried to do the right thing, was Dave Treen. When he ran against Louis Lambert (in 1979), business and industry supported him but when he went after the oil companies, they all turned on him and put Edwards back in,” he said.

“He was absolutely right when he had the Coastal Wetlands Environmental Levy (CWEL) and he wanted some kind of fee from the oil companies for tearing up our coast.

“I like oil companies for furnishing jobs,” he said. “That’s great. But we have let the oil companies absolutely take over our state, damage our coastline and never asked them to pay for it.

The BP spill, bad as it was, was miniscule compared to the damage oil companies have done to our coastline and all our congressional delegation wants to do is go ask Obama to pay for the coastal restoration and Mr. Vitter (U.S. Sen. David Vitter is the leading cheerleader for that. The government didn’t drill the wells and Mr. Vitter knows that but he doesn’t want to ask the people he’s close to to pay for the damage. And neither does Ms. Landrieu. You see the ads on TV praising Ms. Landrieu. Do you know who’s paying for those ads? The oil companies.”

“We need to ask the oil companies who are making billions to pay something rather than asking the people of Louisiana which has (one of the) poorest populations in the nation. Rather than asking people at the bottom to pay the big end of the tax, why doesn’t Mr. Jindal ask companies like Exxon, Chevron, and Shell to pay their fair share? Fifty percent of the coastal erosion in this state is caused by offshore activity.

“In 1926, when we put it into the constitution, we could tax only domestic oil. That was fine back then when 95 percent of our oil was domestic. Today, it’s 96 percent foreign and 4 percent domestic.

“We have to tax oil and gas coming into the state of Louisiana,” he said. “I agree with Mr. Jindal that we need to eliminate the severance tax because it has been dwindling anyway since the ‘80s. Instead of the severance tax, charge a simple 3 percent processing tax which would raise $3 billion a year.

Campbell said former Gov. Buddy Roemer wants to tax oil that’s still in the ground. “That won’t generate the money. I asked Roemer, Edwards and (Mike) Foster (about the 3 percent processing fee) but they wouldn’t help.

“I guarantee you it would pass by 80 percent. Mr. Kennedy (State Treasurer John Kennedy) knows that, Mr. Roemer, Mr. Jindal and especially Mr. (Dan) Juneau, the head of LABI (Louisiana Association of Business and Industry), know it. Mr. Juneau cannot stand a processing tax because the people who pay his bills don’t want it.”

Campbell said, “It’s the LABIs of the world who represent the big companies doing business up and down the Mississippi. LABI is not worried about the Mindens, the Homers, the Farmervilles, the Ringgolds, the Mansfields or the Rustons of Louisiana. They’re worried about the Chevrons, the Dows, the Exxons. Those are the people who put up the big money.

“Legislators who consistently vote with LABI are not representing their districts because LABI could care less about them.

“That’s who Mr. Jindal is dancing to. That’s why he wants to raise the sales tax on the people. Don’t put it on the oil companies that make billions,” he said in mocking the administration line. “They can’t afford it. They might leave the state.

“How are they going leave the state when they have 50,000 miles of pipeline that deliver oil and gas all across America? And they have the Mississippi River! They can’t leave the state. We need politicians with backbone who’ll say, ‘Now listen, you’ve had a great day in Louisiana, but it’s over. We have crumbling roads, poor education, pollution, a torn-up coast and now you’re gonna pay your fair share. Now get out there and start crying that you’re gonna leave the state and we’ll see what the people believe.’”

At that point, Engster finally got to ask, “Are you a member of LABI?”

“Absolutely not. They don’t represent small business. They say they do but they represent the big boys. Never forget that. Mr. Juneau takes his orders from the boys that put up the most money. They don’t worry about the hardware store in Mansfield. They say they do, but they’re fooling those people. They represent the biggest of the big, nothing more, nothing less.

“That’s who Mr. Jindal represents. Look what he’s doing: raising the sales tax on the poorest people living in America—and make sure, by the way, to get rid of corporate taxes.

“You haven’t heard Mr. Jindal say one word about Exxon paying its fair share and you won’t because he’s in their back pocket.

“Mr. Vitter won’t say anything about fixing our coast because he’s in their back pocket.

“Ms. Landrieu won’t say that because she’s in their back pocket.”

LouisianaVoice did a quick check of campaign contributions and found that Campbell may have been onto something when he talked about a lack of courage by the legislature and the congressional delegation and Jindal’s being beholden to the oil and gas industry.

Oil and gas interests contributed more than $1.5 million to 143 state candidates, including legislators and statewide elected officials since 2003, including Jindal, Kennedy, Lt. Gov. Jay Dardenne, former Lt. Gov. and current New Orleans Mayor Mitch Landrieu, Commissioner of Agriculture Mike Strain and former Secretary of Natural Resources and current Public Service Commissioner Scott Angelle.

Moreover, oil and gas contributed more than $1.75 million to six of Louisiana’s seven congressmen since 2002 and $1.99 million to the state’s two U.S. senators since 1996.

The breakdown for the congressional delegation, with the dates each was first elected in parentheses is as follows:

Senate:

• Mary Landrieu (1996)—$940,174;

• David Vitter (2004)—$1.05 million’

House:

• Steve Scalise (2008)—$257,785;

• Charles Boustany (2004)—$641,605;

• John Fleming (2008)—$405,450;

• Rodney Alexander (2002)—$254,559;

• Bill Cassidy (2008)—$194,300;

• Cedric Richmond (2010)—$0