Bobby Jindal speaks at the American Enterprise Institute on Oct. 6, 2014 in Washington, DC.
Photo by Win McNamee/Getty

Louisiana Republicans resort to ‘money laundering’

When we last checked in with the great state of Louisiana, Republican state lawmakers were pleading with anti-tax crusader Grover Norquist to let them pass a budget. He said no. So, what ended up happening in the Bayou State?
 
The mess is a familiar one. Gov. Bobby Jindal’s (R) tax breaks proved unaffordable, and confronted with one of the nation’s most dramatic budget gaps, Louisiana lawmakers grudgingly turned to possible tax hikes to dig themselves out of a hole. The Republican governor, however, said net tax increases were out of the question (he’s running for president, for Pete’s sake).
 
Eventually, a solution came together – called the “Student Assessment for a Valuable Education,” or SAVE – though Republicans themselves described the remedy “money laundering” and “embarrassing.”
 
Slate’s Jordan Weissmann, who called the plan “mind-bendingly stupid,” flagged this report from The Advocate newspaper.
[SAVE] would assess a fee of about $1,500 per higher education student and raise about $350 million total, but only on paper. Students wouldn’t have to pay anything because an offsetting tax credit for the $1,500. Nor would universities receive any new money.
 
However, the SAVE fund would create a tax credit for the $350 million that Jindal could use to offset $350 million of the new revenue that legislators are proposing to raise.
You might think that sounds ridiculous. In fact, you should think it sounds ridiculous, because it is.
 
Weissmann added, “Jindal created a fake fee for students, and a fake tax credit to balance it out, which ultimately leads to no money changing hands, but apparently satisfies whatever agreement Jindal struck with Norquist to preserve the illusion that he didn’t raise taxes.”
 
The Times-Picayune added that the whole point is to “create the illusion of a tax break.”
 
All of this became necessary, of course, not for any substantive reason, but because Bobby Jindal wanted to keep a promise to Grover Norquist and avoid criticism from the right on the presidential campaign trail.
 
The New York Times made a valiant effort to try to make sense of the policy:
Nobody would actually pay this assessment because a student would also be granted a tax credit against that assessment. The student’s tax credit, in turn, would be transferred to the state Board of Regents, the body that runs higher education. The board would then use the credit to draw money from the Department of Revenue.
 
Under the plan, no one’s current tax burden would go up or down a cent.
 
But the Jindal administration said the arrangement would constitute an offset to the new tax revenue that was raised this term, and would thus keep his administration on the right side of its tax pledge.
I’ll confess, I spent about an hour and a half on this last night, trying to break through the smoke and mirrors, and I’m still not altogether sure I understand how this insanity is supposed to work. But as best as I can tell, Louisiana Republican-run legislature crafted a budget plan with tax increases elsewhere, but Jindal said he couldn’t sign it. So GOP lawmakers approved the SAVE policy, offsetting the tax increases with a tax cut.
 
That SAVE doesn’t actually cut any taxes isn’t important; the fact that SAVE pretends to cut taxes is all it takes to make Jindal, Norquist, and the far-right happy.
 
I’ve seen plenty of budget shenanigans in plenty of states – some blue, some red – but I don’t think I’ve ever even heard of something quite as farcical as this.
 

Bobby Jindal, Louisiana and Tax Policy

Louisiana Republicans resort to 'money laundering'