The state of Louisiana is going through a budget crisis. Enthusiastic tax cutting, a slow economic recovery and falling oil prices have left the state staring down a $1.6 billion shortfall with no real plan to fix it. The Republican-controlled state Legislature is trying to cobble together a budget proposal that combines spending cuts with new taxes on tobacco products, increased fees for government services, and “adjustments” to existing tax credits. But there’s one major obstacle standing in their way: Gov. Bobby Jindal’s sad presidential aspirations.
Jindal is still desperately clinging to the frayed tatters of the reputation he once held as the Republican Party’s savior-in-waiting, and so he’s (almost certainly) running for president even though everyone hates him – he’s less popular in his own deep-red Southern state than Barack Obama. Part of his doomed presidential pitch will be that he balanced Louisiana’s budgets without raising taxes, in accordance with D.C. anti-tax gadfly Grover Norquist’s no-new-taxes pledge. He wants to preserve this 100 percent Norquist score even as the Legislature moves to raise revenue and help fix the crisis that Jindal’s staunch anti-tax policies helped create. And he’s trying to pull this off with some amazing and ridiculously dishonest sleight-of-hand.
The issue that’s tripping everyone up is Jindal’s support for the Student Assessment for a Valuable Education (SAVE) tax credit. What the proposal would do is create a new fee for college students to pay, and a new tax credit to cover the cost of the fee. So, practically speaking, it would do nothing. But by conjuring this phantom tax credit, Jindal can argue that he’s still in compliance with Norquist’s anti-tax rules:
If no one pays the new fee and no one actually gains any new revenue from the tax credit, what’s the point of the bill?
Creating a tax credit — at least on paper — can be used as an offset to count against tax increases used to generate new money for the state’s budget, like a cigarette tax hike.
And that matters very much to Gov. Bobby Jindal, so he can claim Louisiana didn’t raise taxes to balance the budget.
Jindal, expected to announce his White House bid in New Orleans on June 24, won’t support any tax changes he — or national anti-tax activist Grover Norquist — considers a net tax increase.
“SAVE is a misuse of the tax system,” notes the Public Affairs Research Council of Louisiana. “The purpose of a tax system is to generate revenue to support needed public services. SAVE does not generate dollars for the state. Also, it does not promote any desired behavior such as a business tax incentive or credit might.” Jindal is threatening to veto other education bills if the Legislature doesn’t give him this phony tax credit. The state Senate has been happy to play along, but Republicans in the House are resisting, calling the SAVE proposal a dangerous gimmick. Lacking for options and running out of time, they’re reaching out to the only person who they think can resolve this mess: Grover Norquist. In a letter to the anti-tax activist, Louisiana House Republicans all but beg him to come out against the SAVE tax credit and release Bobby Jindal from his anti-tax spell.
It’s a remarkable letter to read. The Louisiana Republicans’ case against SAVE is that it could open the door to future tax increases. “This bill would successfully and irreparably establish the precedent that future legislatures and Governors can raise taxes on a nearly unlimited basis, and then claim revenue neutrality solely based on the creation of a purely fictional, procedural, phantom, paper tax credit.” To hammer the point home, they argue that endorsing Jindal’s SAVE position would turn Norquist’s group, Americans for Tax Reform, into “the most liberal and dangerous tax policy organization” in the country.
But their goal in making this anti-tax argument is to help push through a budget proposal that will ostensibly run afoul of the Norquist taboo against raising taxes. To get around this, they implore Norquist to consider the sum total of the Legislature’s efforts to cut taxes throughout the Jindal administration up to this point, asking him to “explain why the actions of the legislature over the last five or seven years, or even the prospective impacts of those actions, are not considered when determining revenue neutrality.” All that tax cutting helped get them into this budget fix in the first place, so the Louisiana House Republicans are, in effect, asking Norquist not to punish them for being too obedient to Norquist’s tax philosophy. There’s also an unsubtle current of desperation flowing throughout the letter, as it very much looks like the elected representatives of the state of Louisiana are pleading for Norquist’s blessing before they can do their jobs.
More than anything else, though, this letter makes Bobby Jindal look ridiculous. He’s on the cusp of declaring his candidacy for the White House and his state is facing an immediate crisis over the budget, and instead of working with Jindal to figure out a way forward, Republicans are reaching out to the Washington power broker whom they see Jindal answering to. There seems to be broad agreement within the state government that Grover Norquist is the person who sets tax policy in Louisiana, and any changes have to go through him first. Only then can would-be president Bobby Jindal get busy implementing the Norquist agenda.