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Is this man worth $320,000 a year?

There’s a story in Friday’s Baton Rouge newspaper, which outlines the state’s economic development plan. See story here.

I found some of the items in plan interesting, but mostly amusing.

According to LED Secretary Stephen Moret here is his 7-step (really 4 steps) plan:

STEP ONE
[I]ncreasing economic competitiveness by spending money to improve roads and to develop a work force that would make Louisiana a “magnet for business.”

Translation: We must spend more of our money to make more money.

Suggestion: Try reducing state spending to reflect our smaller population and to be more in line with comparable size states. That would free-up money for roads and workforce development and would result in significant tax reductions for all existing businesses.

STEP TWO
[I]ncreasing community competitiveness by encouraging more parishes to create economic development agencies….

Translation: Create more bureaucracies that the state must fund. (See list of NGOs and local spending in the State Operating and Capital Budgets.)

Suggestion: The last thing we need is the parishes fighting amongst themselves for economic development. We need the state to compete against other states to keep the businesses we have and to recruit more. That is LED’s job. Abolish all local development agencies and put LED to work. The money saved could be used to lower state and local taxes on existing businesses.

STEP THREE
[C]reating “target investment opportunities” in certain existing businesses and military operations, Louisiana could create thousands of jobs.

Translation: Provide special tax breaks for business that aren’t in LA at the expense of businesses who are in LA.

Suggestion: Why bring in more businesses when we have jobs that we can’t fill now because of the lack of a skilled workforce. More jobs for new businesses will only make it more difficult for existing businesses to survive. Create a pool of skilled works to fill the jobs we already have that are going unfilled. Additionally, reduce the taxes on existing businesses instead of those that don’t even exist.

STEP FOUR
Aiding businesses already operating in the state would create more jobs than gaining new businesses….

Translation: None needed.

Suggestion: Make this Step One. See comments above.

STEP FIVE
[B]usiness recruitment is not to be overlooked….

Translation: Say what?

Suggestion: Re-read Steps 1,2, and 3. This is redundant. Stop with the bureaucratic double-talk.

STEP SIX
“[C]ultivation of small-business opportunities. Most growth will come from small businesses,” he said, if Louisiana can reduce the amount of red tape that plagues small businesses.

Translation: The government that I work for is making it too difficult to do business in LA.

Suggestion: This is redundant with Step 4. Cut the crap and insert make this a part of Step 1.

STEP SEVEN
[I]mproving the state’s image.

Translation: Convince businesses that aren’t in LA that the state isn’t as bad as the businesses in LA believe it is.

Suggestion: Moret needs to talk to his boss. Bobby Jindal already did this. Bobby said it was Step 1. See our “gold standard of ethics” from the 1st Special Session of 2008.

The above 7,5,4 or whatever step plan is what one gets from the top-paid economic development government bureaucrat in America!

You can’t make this stuff up, folks.

C.B.

1 CB 7:06 am

After being bombarded by calls from taxpayers (from the Moon Griffon radio show) about how to get the State Personal Income Tax break beginning on January 1, 2009, House Speaker Jim Tucker responded. (See article here.)

According to Tucker: “It’s a matter of will you take the time to go do it,” …“It’s doable.” The (Baton Rouge) Advocate, August 15, 2008.

Perhaps it is doable, but it is highly unlikely. According to the LA Department of Revenue:

“The new income tax rates will be in effect for the entire year but most of us won’t see that until we settle up when we file our tax returns in 2010,” said Leonore Heavey, senior policy consultant for the revenue department. ibid.

What he said

According to a news release from the Speaker’s Office, here’s how one get the fatter paycheck starting on January 1, 2009, promised by Bobby Jindal and Tucker:

In order to begin taking advantage of this tax repeal in January, an individual may fill out and give to his employer a Louisiana Employee Withholding Exemption Certificate or L-4. To determine the correct amount of withholding, a withholding calculator is available on the Louisiana Department of Revenue’s Web site at www.revenue.louisiana.gov. Once on the site, click on “Individuals.” The Withholding Calculator is the second item listed under “File Online Now” which is located in the center of the page. The Withholding Calculator will be updated in the latter part of 2008 to include the legislative changes enacted by Senate Bill 87.

How does it work?

It’s nice to know that getting a fatter paycheck as promised is doable, but how to do it is another thing.

One finds the “Withholding Calculator” here: http://revenue.louisiana.gov/mis/wthcalculator/taxcalc2006.asp

Step one

a. Plug in their Federal Adjusted Gross Income for 2009. Yes, that’s your future A.G.I.

How does one determine that if one is an hourly wage earner or a seasonal employee or for that matter a salaried employee who might get a raise in 2009?

b. Then, fill-in your LA adjustments to your Federal A.G.I.

c. Next, list your Federal Income Tax liability for 2009. Yep, that’s the money you will owe when you file your tax return in April of 2010.

d. Now, insert your refundable and non-refundable LA tax credits.

e. Put in your current withholding for 2009. That would be zero because you are filling out this form in 2008.

f. Insert the number of pay periods. If you are paid weekly that would be 52.

g. Hit the calculator button and you get how much you should have withheld each pay period.

So far so good.

When you get the figure you will get a warning that states:

This is only an estimate of your Louisiana tax and withholdings based upon the information you supplied - this estimate does not prevail over the final results of a properly filed income tax return.

In other words, if you underpay your withholding by 10% or more, you will be subject to a penalty.

Step two

Fill-out a L-4 Form (Attached below.) which increases the number of dependents you claim on your tax return.

There are a couple of problems with this form:

a. There is no relationship between the amount of tax relief one gets with the Stelly Tax rollback and the number of one’s dependents. In other words, how does one know how many extra dependents to claim to get back the exact amount of your tax reduction?

b. If one is single, how does one increase their number of dependents? If one is married with no children, how does one increase their number of dependents? If one has a spouse and children and claims all currently, how does one increase their dependents?

The answer is simple; one must lie to the LA Department of Revenue. However…..

This statement is found on Form L-4: “I declare under the penalties imposed for filing false reports that the number of exemptions and dependency credits claimed on this certificate do not exceed the number to which I am entitled.”

Does it work for you?

I suggest that you follow the above advice from Speaker Tucker and go to your employer or your employer’s accounting department and see how it works for you. If it doesn’t work call Speaker Tucker at: (225)342-7263.

C.B.

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1 CB 9:24 am

Bobby Jindal promised that taxpayers in Louisiana would get larger pay checks starting January 1, 2009, as a result of the passage of Senate Bill No. 87 of the 2008 Regular Session which returned the tax brackets to pre-Stelly Plan.

On May 14, 2008, Governor Bobby Jindal said the following:

“This is real tax relief that working Louisianans will notice in their paychecks starting January 2009. The elimination of the Stelly Tax increase means over three hundred million dollars in lower taxes next year – more than a billion dollars in tax relief over the next five years - and more money in the hands of families who will do a better job spending their money than the government would. This is another example of just how much you can get done if you don’t care who gets the credit.” Emphasis mine.

The amendment

During the House Floor debate on SB 87, House Speaker Jim Tucker offered an amendment to prevent the Department of Revenue from promulgating new tax withholding tables before July 1, 2009.

At the time Tucker was questioned about the impact of his amendment:

Tucker insisted the amendment still would allow taxpayers to start collecting fatter paychecks in six months.

The amendment, he said, would give taxpayers the choice of asking their employer to change their withholdings or of waiting until they file their income tax return in 2010 to glean the savings.

State Rep. Cameron Henry, R-Jefferson, accused Tucker of bait and switch.

He noted that the governor publicly announced the savings would begin Jan. 1.

Henry said the Legislature should not burden taxpayers with the responsibility of changing their withholdings.

“We’re sending a terrible signal,” Henry said. “We promised them Jan. 1, 2009.”

Tucker told Henry he was “absolutely incorrect.” The (Baton Rouge) Advocate June 5, 2008.

Calls to Speaker

Wednesday, after receiving inquiries from listeners (employers and employees) about getting the tax reduction in their paychecks beginning January 1, statewide radio talk show host Moon Griffon suggested to his listeners that they call Speaker Tucker to learn how. According to Tucker (statement above), taxpayers could ask their employer to change their withholdings to reflect the tax reduction.

The initial response from the Speakers Office was that they didn’t know how to get the reduction in their withholding. Later, after being bombarded by callers, the Speakers’ Office began sending out copies of Form 4-L from the LA Department of Revenue.

Bad idea

Griffon consulted with tax experts who told him that the form sent by the Speakers Office would not resolve the problem. The form only allows an employee to increase the number of dependents.

According to the experts, to increase one’s dependents above the number of actual dependents, in order to get extra money in their paychecks, would require them to lie.

Additionally, there is no relation between the number of dependents and the reduction in taxes as a result of the rollback of the Stelly Plan. As such, an increase in dependents may subject taxpayers to penalties for failing to withhold enough money on their state and federal tax returns.

Therefore, despite the promises of Jindal and Tucker, most taxpayers will get no State Personal Income Tax relief until they file for their state tax returns in 2010.

According to the experts, the only way for taxpayers to receive the tax relief they were promised is if the Department of Revenue promulgates new withholding tables prior to January 1, 2009.

Solution

The problem can remedied, but only if the leges come into a special session before the end of this year. Then SB 87 can be amended to delete the prohibition against the Revenue Department from promulgating new State Withholding Tables.

If you want to get the tax break you were promised, contact your lege and demand that they change the law before December 31, 2008.

Finally, Griffon will have tax experts on his radio show at 10:00 AM today to discuss further how we were misled. Listen live at: www.moongriffon.com

C.B.

1 CB 9:58 am