Why Louisiana Stays Poor, PT 1: the Louisiana paradox

Why Louisiana Stays Poor, PT 1: the Louisiana paradox


We want to examine the elements of a rich
zip code and a poor zip code in Louisiana. The rich zip code is home to 177 separate
industries. It produces $5.3 billion in economic activity
each year — higher than the GDP of 40 countries. Now, I want to remind you. I’m not talking about a state. I’m not talking about a region. I’m talking about a zip code. It generates $3.9 billion in business profits
per year — the highest in Louisiana. And it accounts for $12 billion in exports
per year. One zip code. Now let’s look at the poor zip code. 38.1% of residents live in poverty. Median household income of $21,000. Highest unemployment rate. Highest murder rate. The 2nd highest incarceration rate. And the lowest life expectancy in East Baton
Rouge Parish. And you know what’s the Louisiana paradox? Guess what? This is the same zip code: 70805. Ladies and gentlemen, we can no longer pretend
this is the best form of economic development. As Edgar has joked in the past, we are just
normal people presenting this information. We’re just average citizens. That’s an upgrade for me to be called normal
and average. But thank you very much. I really appreciated the complement. I think there’s one thing we can agree on
as citizens of Louisiana — things are not great. We feel like we are a very poor state. But I’m going to tell you about how we are
an extremely rich state. Louisiana is home to extraordinary wealth. Louisiana ranks #2 in the nation in crude
oil refining — that’s a quarter of the refining in the entire nation. Louisiana ranks #4 in the nation in natural
gas production. We rank #3 in the nation in chemical production. Louisiana is a top 10 oil producing state. Louisiana forms the heart of the nation’s
pipeline system. This is how natural gas and other different,
important resources are moving around the country. We are so central to the processing and moving
of natural gas, the world price for natural gas is set in Erath, Louisiana at Henry Hub. Erath, Louisiana. We could be considered the Silicon Valley
for petrochemicals. We’re also the center of the nation’s
inland waterway system. #1 in the nation for port tonnage. We have 5 of the 15 top ports in our State. We rank #1 in the nation in salt production. Almost all of Louisiana is a salt deposit. We rank #2 in the nation in sugar production. #3 in the nation in rice production. And Louisiana has ranked #1 or #2 in foreign
direct investment every single year since 2008. That means that more money is coming from
around the world through Louisiana than almost anywhere else in the country. Now let’s see how others are faring. Infant mortality, Louisiana ranks 46th
49th for poverty. 47th for household income. 47th for food insecurity. 50th in income gap by gender. 47th for property crimes
46th for violent crimes. 48th for reading scores. Louisiana ranks 49th for math scores. And 48th for life expectancy. US News and World Report commissions an analysis
every year using 75 different indicators. Let’s see if we can find Louisiana. We can scroll down. It’s not 10th. It’s not 20th. It’s not 30th. We are 50th – dead last in the country. So we’ve heard about the wealth and natural
resources we have in our state. And we’ve also heard, what we already know,
that we’re bottom of the list in all the important categories when it comes to life
indicators. If Louisiana is so rich, why is it that we
are so poor? So we typically take it for granted that economic
activity means individual, family, community prosperity. But how is that? What is the connection? It should be coming from two main vehicles. Wages to families. As well as public goods funded by taxes. I’m talking about schools, libraries, the
police, fire departments, infrastructure, things of that nature. So what would happen if one of those went
away? What if, even worse, the money that should
be going into those public goods is instead going in the opposite direction? Is there something we’re doing differently
in Louisiana? Is something unique happening here that’s
not happening across the country? Let’s take a look. This is a graph of all the corporate subsidies
per capita for every state. All the way to the left there’s a dotted
line and that’s the national average ($291 per resident). Then, if you can squint your eyes, you can
see our neighbors in Texas ($89 per resident). And, I’m sure you’ll be able to see it,
there’s Louisiana – the big red line. We are spending $2,857 per capita in corporate
subsidies. And about 80% of that is going to the industrial
tax exemption program. The difference is not *that* Louisiana has
tax exemptions. This is happening across the country. The difference is how we’re doing them. Louisiana is the only state in the nation
that is giving a state-level board the authority to grant tax exemptions for local entities’
property taxes. “I’d like to welcome you to the Board
of Commerce and Industry.” So the dollars that should be going to the
Metro Council, to the school board, to the police – it’s a STATE-level board made
up of people across Louisiana going into a board room and saying “yes” or “no.” “Is there anyone that would like to hear
the details [laughter] of all of these.” It turns out that is a very big deal. Board Chair: “All in favor of approving
these ‘en globo’?” All: “Aye”
“All opposed with a ‘no’? …
It’s really easy to give away other people’s money. Here’s a chart of all the requests in the
last 20 years. The little tiny line is who has been rejected. The approval rate has been 99.95%. There’s been no cost benefit analysis done
in 82 years. “Do they include the return on investment
statement that is supposed to be part of these according to the rules? … Where? Because I looked through, and I could not
find it.” So they’re rubber-stamping these, and they’re
not going to see, “Okay, what are we gaining for these? Are there jobs? Are we benefiting as a community from this
investment?” We don’t even know because we haven’t
even looked. ITEP is extremely expensive. I think we can all remember the drama of the
film tax exemption program just a few years ago. This program costs 10 times more than the
film tax credits. Just in 2017, $1.9 billion – billion with
a “b” – was lost in revenue to local taxing bodies. $720 million was lost to Louisiana schools
– 20% of their state and local funding. That’s in just one year. We’re using ExxonMobil as an example. But I want to make clear – ExxonMobil, or
any other company, is not doing anything that is illegal or wrong. They are doing things that are allowed. So I don’t you to walk out of here saying,
“That Exxon, they, they …” No. It’s their fiduciary responsibility to minimize
the cost to their industry. It’s not on them. It’s on us and our lawmakers to change it. We have allowed this to happen. Now, ExxonMobil has four major US oil refineries. Let’s look at the Baton Rouge and Baytown
(Texas) facilities. They’re Exxon’s largest. Baytown refines 561,000 barrels of oil per
day – about 32% of Exxon’s total US production. Baton Rouge refines 503,000 barrels of oil
per day – 29%. The property values at each refinery are also
similar. Baytown is valued at $2.8 billion, while Baton
Rouge is valued at $2.2 billion. In Baytown, Exxon’s taxable property is
$2.5 billion, with 9% of its property value exempt. In Baton Rouge, the taxable property is $711
million – 67% of the total property value is exempt. Similar size. Similar production. Same company. Different outcomes. How does this affect our local tax base? Baytown collects $48 million from Exxon’s
refinery each year. While Exxon’s East Baton Rouge refinery
only pays $10 million. $21 million, Baton Rouge is giving up. That’s enough to give each school employee
a $3,800 raise. And that’s just one refinery. And it’s one of four ExxonMobil facilities
in East Baton Rouge, one of 59 industrial facilities receiving ITEP exemptions in East
Baton Rouge and one of 897 plants receiving ITEP exemptions across the state. So we want to look at this statewide. We’re going to look at a few of the largest
of those 897 plants. First off, we have BASF in Ascension Parish. The red line is the section they are *not*
paying taxes on. The green is what they are liable for. So at BASF, 73% of their property value is
off the rolls. Also in Ascension Parish, we have Methanex. 99% is off the rolls. I don’t think you can even see the little
green sliver that they’re paying taxes on. That is $7.5 million, or 1% of their total
property value. In Caddo Parish, we have Calumet – 89% off
the rolls. Which is $502 million. In Cameron Parish, they have 2 multi-billion
entities. Cameron LNG is worth $11.7 billion. And they are exempt from 99.99% of that. The new World Trade Center in New York is
one of the most massive projects in the world. And that is $3.5 billion. So this alone is worth nearly 4 times more
than that. And they’re paying a fraction of a percent. Also in Cameron Parish is an even larger facility
— $12.8 billion. And once again, they are exempt from 98.9%
of that. We have Calcasieu Parish, with Westlake Chemical
– 77% off the rolls. In Iberville with Shintech, 98.6% off the
rolls. That’s $1.84 billion. In Orleans Parish, we have Folgers – they
are 69% off the rolls. In St. Bernard Parish with Chalmette Refining,
74% off the rolls. In Rapides Parish, Procter & Gamble – we’ve
all heard of them – 70% off the rolls. West Baton Rouge, with Dow – 95% off the
rolls. In St. John the Baptist Parish, 88% off the
rolls. This is another multi-billion facility. In St. Charles Parish, 91% exempt. Another multi-billion plant. In East Baton Rouge Parish, we brought it
back. Georgia Pacific, 67% off the rolls. ExxonMobil, which we already looked at — $1.45
billion off the rolls. So across the state, between 66% and 99% of
industrial property is perpetually exempted from property taxes. That means none of these companies across
the state that are getting this program are paying on any more than 1/3rd of their property. So local governments stand on three legs:
sales taxes (we’re all very familiar with those), state and federal funds and property
taxes. When all of these corporations are exempted
from their property taxes, we’re chopping off a major portion of one of those legs. And without that, we are left massively unstable. If the property tax leg of the stool that
you just saw had not been cut by the state board, we would, in East Baton Rouge Parish,
collect an additional $70 million per year. $42 million per year is lost to police, fire,
roads, parks, libraries, health and others. $28 million per year is lost to public schools. That would be enough to give every teacher
a raise of $9,000 – or fully fund universal pre-K. In June of 2016, Governor Edwards, because
of our research and involvement, signed an executive order giving local taxing entities
a voice in granting exemptions. For the first time in 82 years, we have the
opportunity to change things. But you know, that executive order is meaningless
and it won’t do anything unless we get involved and we make sure it happens.

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About the Author: Oren Garnes

100 Comments

  1. And all of those people on the state board are just giving away billions of dollars in revenue out of the kindness of their hearts, right? LOL! Who'd like to see the net worth of each of them made public?

  2. The reason Louisiana is so rich and yet so poor is that the “Game IS Rigged” but the masses don’t know it and worse, they don’t know that they don’t know, that they don’t know! This is also why 5% earn, receive, own and enjoy 95%of the wealth produced and why 100 Million live in poverty or live with some kind of government assistance.for details …. http://www.gilbello.com

  3. Giving tax exemptions to gas companies is the single stupidest thing i''ve ever heard. Its not like the company is gonna say nope were not paying that were taking out business else where and leaving the oil behind lmaooo They would never leave and let someone else take the oil. This is actually a situation where the people and the state should have the oil companies by the balls but instead its the other way around. The people of Louisianan should be living the Saudi oil princess of Saudi Arabia.This theft is not only wrong but tragic.

  4. Holy shit, 99% tax exemption!?!?!? I fundamentally believe all tax is theft, but when the middle and lower class are threatened at the point of gun to pay taxes and corporations are 99% tax free, THATS FUCKING BULLSHIT!!!!!!

    That’s also THEFT

  5. … being a producer of rice, sugar and salt is supposed to make you rich? Of course not.
    It's typical of any economy based on industry… transformation and harvest… to have higher gender based wage gaps… the high paying jobs for a regular joe (or regular jane) revolve around manual labor.

    Where are the head offices for those industries? THAT is how wealthy cities/state evaluate their standing. Where you have the HQs, you'll find the law firms, the accountant firms, the marketing firms… and the great jobs…. and then with the great jobs… you'll find everyone catering to the people occupying the great jobs… in good and decent jobs. Men and women alike.

    It's fine that you pay industries to localise themselves in Louisiana although one might wonder why when the water ways and pipelines are there and that's where those industries need to be anyways… what are you getting for that money?
    https://www.missourieconomy.org/industry/fortune_500/index.stm

    Compare yourself with your adjacent states…

  6. Lousiana is experiencing a big brain drain. Houston, Dallas, Nashville & Atlanta are the destination cities for many. The state had the upper hand over Texas in many respects until the 1940s. New Orleans & Houston were once equals in economic power, but the reluctance to progress pushed Houston ahead. Sure. NOLA is a wonderful city, but it decided tourism would fit the city's culture, while Houston started to bring more & more O&G companies, while most of the offshore rigs would be in LA.

  7. California is the highest taxed state in the country. It also has the lowest quality of life and the most amount of poverty. Looks like your little retarded video is shot to fuck.

  8. .. …and yet Louisiana has the highest taxes in the country. Louisiana stands alone with 10% state tax on everything you buy. Plus, you also have local taxes on top of that.

  9. As a lifelong resident of a poor parish, I can say that there's a few more reasons. Though we're at the heart of America's inland waterway system, our politicians keep pouring money into building massive reservoirs like Toledo Bend (which has been known to spawn some of Louisiana's most destructive tornadoes), Caney lake, Lake D'arbonne, and others. In Caldwell Parish, work on one relatively small reservoir hasn't even been completed yet, but the state is already planning to create another reservoir that will swallow up the other reservoir, as well as the western half of the parish.

    Also, the crime rates are even higher than what the figures suggest. The property crime figures don't count crimes that law enforcement intentionally and willingly fail to act on, nor do the figures count the property crime that goes unreported because people know the police will take no action. The violent crime figures don't count the instances of law enforcement falsely arresting people and "roughing them up."

    On the subject of law enforcement, the money that they do receive is squandered away by officers doing things like using their patrol cars for personal business when they aren't even on duty, or driving fast and aggressively when not responding to any calls or attempting to catch any traffic violators. Also, LEOs in certain places have been known to group up in parking lots and sit for hours on end talking to each other, with all of their patrol cars idling with the air conditioners on.

    I could give quite a few more examples including LEOs making unlawful traffic stops, falsifying time sheets, speeding 70-80 MPH through residential neighborhoods without emergency lights, and so on, but this shall suffice. Given the information in the video as well as what I've seen personally, it's no wonder Louisiana stays poor.

  10. I tend to be one of the last to support a tax increase, and being Louisiana, my initial thought was of corruption and levee funding being diverted. But this is a very solidly argued point that Louisiana went way too far in practically exempting industrial properties from property taxes.

    Then my next reaction was that there was no way the political fight would be won so I was pleasantly surprised to see the progress shown at the end.

    Congratulations to you guys for helping to create a significant improvement in public policy! Now I hope the money will be well-spent.

  11. Notoriously corrupt state going back to the days of Huey Long. The property tax exemptions are made to attract business and development that brings jobs. Very simple equation : Raise taxes, cut jobs. Watch companies slow hiring and relocate out of your state.

  12. As with all things follow the money trail. I am absolutely not in favor of giving the state more money to waste. It makes me madder than hell when I find out how our politicians are spending our hard-earned tax dollars. Do you think for one minute if the politicians did have more money to spend that they would actually spend it where it should be spent? I would be willing to bet that no other state in the Union has a more corrupt system of government with more corrupt people running that government than Louisiana does and always has had. This was a very well done video there is probably lots of Truth in it. However I am not completely sold that the company's not being charged massive property taxes is the answer to Louisiana's prayers.

  13. OMG, I had no idea how bad this was. I lived in New Orleans, Louisiana for 10 years. I actually left because of lack of opportunities, widespread poverty and lackluster healthcare system. I also knew that my life expectancy would go down drastically if I stayed. I did develop endocrine health issues during and and immediately after living there. It took 10 years to figure out what was wrong with me. My DNA may have been predisposed to these problems, but maybe they may never have come up if I never lived there.

  14. Fuck, at that rate you can just straight up pay those subsidies to Louisianians and enable them to live a middle class lifestyle..
    Side note, why am I watching this? I'm not even from the US. Very interesting though!

  15. So they have a bunch of rich industries that require low paying manual labor employees. Pretty easy to see the problem here

  16. My God … their elected officials gave their livelihood away. So here is why trickledown economics doesn’t work

  17. so this is what happens when you give welfare to corporations, but I thought they are bringing high paying JOBS!!!!!

  18. I hate living here. I’m leaving soon. The plant is making people sick and we don’t make enough money and pay too many taxes

  19. You need to add citations here. I can't get excited without citations I can verify. Your amazing presentation is made impotent without citations.

  20. I'm from New York, and almost all of this video was new information to me. Excellent work on clearly and efficiently educating your populace and bringing attention to the corruption plaguing your state. I hope you can turn it around and make a great future for yourselves.

  21. No1.: many folks in your state do not even understand, what do you talk about and what it implies, because of lacking education. You need to be more explicit.
    No2.:one state alone cannot solve its problems, cause if you put pressure on the business, they will organize and brainwash the population to counter your action. In worse case, they will move out of state even out of country, to where they will give them, what they want or the most of it…This requires to be a concerted effort of all states to stop this robbery.
    No3. As long as the money is allowed in politics (lobbying, contributions, power and influence peddling, which is all form of corruption, we were brainwashed to not see it that way), nothing will change for better, only for worse….

  22. Income Gap by gender BY THE WAY is not a wage gap, but an earnings gap. It’s because all these young ladies are getting pregnant and getting on welfare.

  23. It has to do a lot with the population. If a group of really bad people are together, they will destroy any city no matter where in the world they lived. America has many cities that are full of criminals and high crime.

  24. I'm in Texas and love Louisiana's culture and people and this saddens me — this is what happens when owners of capital take over the government and use it to enrich themselves at the expense of the general welfare. There is a similar problem in Texas where commercial real-estate developers underpay their taxes (or don't pay at all) while the burden of paying for schools disproportionately falls on homeowners. There is a lot of false advertising that Texas is a "low-tax" state. Our states are also both rich in resources — a goose that lays the golden eggs — so they could support a dividend like Alaska, but very wealthy and private interests would prefer to keep the goose locked away as they hoard the eggs.

  25. IGNORANT narrative. We lost Disney in New Orleans East because original Edwards and his big tax STOOGES had their hands out. Outstanding job Louisiana conservatives to compete with Texas lure in a few of these great businesses here to pay Louisiana's hardest working people six figures. More than Big Gummit socialism can'y pay these kind of wages – as seen in the tiny apartments in 3rd world left leaning communist countries. Only when more of our last place Democrats gain that work ethic to get us out of 50th place should you tax, but then we won't need to. We have a spending problem – ignoring roads and wrecklessly spending beyond inflation on healthcare. An ignorant failure to protect people from excessive auto tort in Louisiana. Let's discuss – I am going to destroy this fraud narrative.

  26. corporations pollute and get tons of corporate welfare. The people blame big government but yet need federal assistances. Blue states subsidizing red states.

  27. Shit hole state. I lived right next door in Beaumont Texas. I not a fan of Texas either but better than this trash state.

  28. I mean, in my opinion, we are the most loving, and welcoming state. I also think that we are one of the important states, and smartest. This is my opinion.

  29. I never thought I'd be riveted to watch a video about tax exemptions. This is amazing. Thank you TLA. It makes me wonder how else are citizens of every state getting screwed and to what extent.

  30. 5 11 2019 Hey TogetherLouisiana, I noticed over 600k views & 5.8k comments! Imagine if all those people subscribed & spead the word/work about Together Louisiana! We the people are the government. Let's all get Together & help them do their work to inform the Great State of Louisiana & VOTE those rascals OUT! Be well. v

  31. I have never understood the argument:
    "Hey we need to attract business here so we can generate income through business taxes"
    Ok sounds good. How do we attract them?
    "We say they don't need to pay taxes!"
    Uhh what?

  32. What a fantastic video. This sort of policy analysis is so essential in a time where such work is so seldomly appreciated.

  33. Slick made video. However, we cannot tax ourselves into prosperity and intelligence. Every tax this is paid by these corporations are written by them, but paid by the consumer down the line. So if all those consumers are living outside the USA then fine. If not, which they never are all living out of the US, then it is only a tax on us, the consumers. We could not give them that tax break and they can go to another state or country to build these plants. How dumb would we be by turning away all those jobs and the money that comes with it. These plants give out an enormous amount of money through wages, buying, sponsorships that flows out in the community. That would all dry up. The way for people to not be poor is to finish high school with fairly good grades. Get a job in these plants or a business that sells to these plants. Value education. Get away from any addiction. Have a family and stay together. pass this on to your children. Everyone will work themselves out of poverty. Live by the lines of "if it is to be, it is up to me"

  34. We need to save Louisiana! Share this video we can be wealthier them Texas and even California. We need to come together!

  35. Plus most of the personal property taxes are low compared to other states. Texas is the same way but taxes the hell out of the homeowner.

  36. This is the inevitable result of anti-Georgist (i.e. anti-labor/anti-commerce/pro-land speculation) tax policies. Henry George was right, and both his left-wing and right-wing critics were, and remain, wrong.

  37. So an extremely small group of people are sucking all the money from an entire state. Sounds like the great American dream to me. Fuck everyone else as long as you and your peers get it all. Countries, states or provinces run on greed are disgusting.

  38. There is a massive transfer of economic rent from tenant communities to landlord communities. A land value tax would interrupt that outflow of economic rent and return it to the poorer communities. Also, there is no rationale for economic development subsidies when the taxes are on land value.

  39. Now I wonder if this is also true in Alabama, Mississippi, and other states in the South, where public education is so underfunded and opportunity so thin.

  40. So…you think the solution is that we should steal more money than we already do? How about instead, we don't take any money from anyone, and fund all government programs with voluntary funds instead?

  41. Do away with income taxes and start collecting property taxes. Create Ind school districts. This will help those wealthy individuals who run these companies make sure their companies are paying those taxes for those schools that their children go to. EBR parish could have 2 or 3 Independent school districts with the

  42. this is why, imho, it is imperative that Bernie Sanders gets elected. He is the ONLY candidate who has been talking about this for years. #Bernie2020

  43. fiduciary responsibility is a myth. They have an obligation to support citizens. nowhere is there a law that says exxon, or CEOs, have a legal responsibility to minimize taxes. That is a myth repeated by the financial sector. https://www.lawschool.cornell.edu/academics/clarke_business_law_institute/corporations-and-society/Common-Misunderstandings-About-Corporations.cfm

  44. I visited a small Louisiana town and the air smelled bad because of a refinery. Also people have cancer in these refinery/plant towns. (I’m from New Orleans)

  45. This upsets me just watching. What's crazy is they tax the crap out of their residents and this is why I'm leaving

  46. High taxes going into deep corrupt pockets.
    Crooked business, crooked politicians, and crooked cops.
    Poor people accepting it all and not fighting back.
    That's the only answer.

  47. I’m glad I moved. There’s no work there, if u wanna stop being so poor CREATE MORE FRICKING JOBS!!! why is it I found one in TX so fast and making thousands a check

  48. All of this information is available to all voters but they still refuse to take action. Ironically, the information age appears to be the best time to be an oligarch in America.

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