WikimediaGrover Norquist, the tax scold who famously said he wants to shrink the federal government down to a size small enough to drown it in a bathtub, has responded to state Rep. Joel Robideaux and a handful of colleagues who wrote to Norquist seeking his take on whether the Gov. Bobby Jindal-backed Senate Bill 284 — a tax credit plan for college students meant to offset any tax hikes they and their families face as a result of the Legislature doing its job and making up for seven years of Jindal’s fiscal insanity, and a bill even many Republicans characterize as a charade — will really allow the state budget to remain tax-neutral.
Tax neutrality — any tax increase is offset by equal tax/spending cuts elsewhere — is a central feature of the pledge by Norquist’s Americans for Tax Reform that Jindal and many other GOP politicians have signed, binding them to the fantasy of supply-side economics.
Norquist’s response dances around whether SB 284 will achieve its intended goal:
Dear Representative Robideaux,
Thank you for the letter you sent Sunday night by fax to Americans for Tax Reform (ATR). You suggest that politicians should take credit for tax cuts passed by previous legislatures. That would allow tax and spending politicians to hike taxes every time they come into office following a tax cut or series of tax cuts. Under that logic, President Obama could argue he didn’t raise taxes.
As I noted in a letter sent to you and your colleagues at the beginning of session, your constituents have already been hit with more than 20 federal tax increases signed into law by President Obama in recent years. Piling on with a net tax increase at the state level will only do more damage to hardworking Louisiana taxpayers.
As you know, Louisiana is not undertaxed. The problem is that some want to spend more than the current tax code collects. You ask about the SAVE Act. ATR does not support or oppose the SAVE Act. While the SAVE Act does include a credit that can be used to offset other tax increases, there are other ways to achieve revenue neutrality, such as by repealing the corporate franchise tax and/or cutting the state income tax. If you don’t like the SAVE Act, why not find other offsetting tax cuts that are more to your liking? ATR is agnostic as to whether a credit or deduction is good policy. We merely call balls and strikes regarding whether a change in tax law results in a net tax increase.
Any change in the tax code that increases the net tax burden is a tax hike. Raising the income tax or sales tax rate, and making no other changes, is a tax hike. Eliminating tax credits or deductions without an offsetting overall rate reduction or tax relief elsewhere is a net tax increase. The Obama administration has argued that removing tax provisions that reduce the tax burden for energy industry employers is not a tax increase. It clearly is. However, removing tax credits or deductions while reducing the tax rate so that the total bill is revenue neutral is not a tax hike.
The government of Louisiana has been overspending for decades and has grown much faster than the rate of inflation and population growth. Fixing that is key to right-sizing state government. While much progress has been made in recent years, it’s clear there is much work left to do. Members of the Louisiana House of Representatives couldn’t even find the political will this year to pass legislation that would end the use of taxpayer resources for the collection of government union dues. The fact that such a commonsense reform couldn’t get done is disconcerting.
As occurs in states across the country, ATR is more than willing to work with lawmakers in Louisiana to help find ways to reform government so that spending is at a sustainable level and tax increases can be avoided.
Sincerely,
Grover G. Norquist