Economist and Good Jobs First Executive Director Greg LeRoy addresses the LFT convention.
To hear the captains of industry tell it, Louisiana has some of the highest business taxes in the United States. That claim has prompted lawmakers to grant hundreds of millions of dollars worth of tax breaks in the past few years.
Louisiana schools have lost millions because of those giveaways, according to economist Greg LeRoy.
Here’s the paradox that costs our children a chance at a world-class education. On paper, Louisiana business and industry pay high taxes; in reality, we have so many loopholes in our tax laws that businesses actually pay less than other states.
LeRoy, who is executive director of Good Jobs First, told over 200 delegates to the Louisiana Federation of Teachers’ convention that local school districts are being starved by Louisiana’s system of granting industrial tax exemptions.
Over a 10-year period, he said, local governments lost some $2.5 billion to industrial tax exemptions, three-quarters of which produced no new jobs for the state. The share of that lost to school districts was nearly $1 billion, he said.
The property taxes affected by industrial exemptions are for local governments, including school systems. The state collects no property, taxes, and therefore has nothing to lose by granting exemptions.
“The exemptions are granted by a state board,” LeRoy said, “but the effects are felt by local governments.”
Louisiana’s tax break largesse isn’t limited to industry, LeRoy said. Big-box retailers such as Wal-Mart, Bass Pro and Cabela’s also get deductions that create unfair competition with locally owned small businesses and starve government of resources.
In our state, both Bass Pro and Cabela’s built outlets with sales tax rebates, costing local school districts millions in lost revenue.
Big box retailers like Wal-Mart are subsidized by government in several ways, LeRoy said. They are awarded subsidies for locating storage and warehouse facilities in the state; many of their employees rely on state health programs instead of employer-provided insurance; and some avoid taxes by routing profits through dummy corporations in states with lower tax rates.
LeRoy said that Louisiana is one of just 12 states that does not cap a “vendor discount” which allows big box retailers to keep a portion of their sales tax revenues for record keeping.
As an example, LeRoy said that in Louisiana, Wal-Mart collects about $490 million in sales tax, and gets to keep almost $5.5 million of that. But in Alabama, Wal-Mart collects more than $550 million in sales tax and gets to keep less than $5,000.
“Louisiana loses $34 million a year in vendor discounts,” LeRoy said.”What could that money do for education? Why let retailers legally skim it?
Here is a link to LeRoy’s organization, Good Jobs First. Here is a link to an article he wrote about progressive tax policy and jobs in a “green” economy.