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Pelican Institute forgets to remove references to Ohio and uses incorrect tax rates in recent study on Louisiana budget crisis

The right-wing think tank published the methodology of its “study” claiming that solving Louisiana’s fiscal cliff would hurt the state’s economy.

Shortly after The Bayou Brief published a critical report on the four paragraph-long “economic study” conducted by the Pelican Institute, a right-wing think tank closely associated with the Koch brothers, the organization uploaded a methodology addendum on its website.

According to sources familiar with internal discussions among members of state Republican leadership and their staff, the Pelican Institute’s study had been planned as a part of a coordinated messaging campaign in advance of the upcoming second special session, with the hope that it would help some legislators justify opposition to renewing or replacing the revenue necessary to solve the current $648 million fiscal cliff.

Among other things, the study claims that four proposed solutions under consideration would each “kill jobs” and “shrink (the) state’s economy” and mendaciously asserts that two of the plans, which both involve decreasing a portion of the fifth penny in sales tax, would somehow result in thousands of job losses and between an $86M – $173M reduction in the state’s GDP.

Currently, the Louisiana state sales tax rate is at 5%, and when you include that number with the sales taxes rates levied by many local governments, Louisiana’s combined state and local tax rate is the highest in the entire country. The approval of a fifth penny on state sales tax had been offered as a temporary, stop-gap measure, despite the opposition among Democrats and organizations who believed the regressive tax disproportionately affected the poor and working class.

But, at the time, it was the only solution amenable to House and Senate Republicans, who were far more concerned with preventing any effort to consider structural tax reform on personal and corporate rates.

Among others, Gov. John Bel Edwards linked to The Bayou Brief‘s report about the Pelican Institute’s study in a tweet Wednesday morning. This, perhaps more than anything else, put them in damage control mode.

Hours later, the Pelican Institute decided to show its math- they even bragged about it, which, unfortunately for the think tank, proves beyond any doubt that this study was fundamentally flawed and based on an entirely bogus set of assumptions.

It constructed an economic model with incorrect baselines, claiming that state sales taxes were 4% and not what they actually are, 5%. This fact alone invalidates their findings, and as such, it promotes fake news and transparently false methodology.

No one is arguing in favor of a tax hike.


Again, because their baseline numbers were incorrect, the entire study is invalid: 0.04 should be 0.05, the effective tax rate. If they had started with the current numbers as their baseline and the reduced numbers as their “scenario,” the study would have shown dramatically different results.

But there is one other thing: The Pelican Institute’s model included multiple references to numbers collected from the Ohio Department of Taxation, inadvertently proving the organization hadn’t even thought to remove citations to another report about another state facing an entirely different set of circumstances, (After I pointed this out, they removed those citations and scrambled to upload a corrected document).

Unfortunately for the Pelican Institute, I saved the original report before they removed it online.

It should be abundantly clear that, in a rush, The Pelican Institute hastily scrambled to recycle the formula used in a different work product as something original and thorough.

Once again, it’s worth reiterating: We ran state government on the fumes generated by talking points for most of the past decade. It bankrupted us.

Now maybe we should learn some simple economics and basic arithmetic.

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