1. Report Completed: 09/29/2008
In the Name of Allah, the Beneficent the Merciful
Topic: Tax Laws Are Something Else
This is a letter I wrote to Mr. Singletary of New Orleans City Business Newspaper about his
article he wrote on March 18, 2002. I came across this article during my research for the envisaged
Hurricane Katrina Recovery Program that MGE19 with other organizations are planning and will be
implementing in the near-future. Although this article was published in 2002, it is relevant today. His
article was about how tax laws are created to benefit big business. I wanted to expound further on
why many of the tax laws are made the way they are.
Dear Mr. Singletary,
I read your March 18, 2002 article in New Orleans City Business, and I agree with the
article 100%. My name is Deitric Muhammad, and I wrote the 2002 sales tax policy for New
Orleans that drastically reduced the sales tax from 9% to between 3%-5% in 2002 in order to
increase tax revenue by making "the cost of doing business" in New Orleans lower. Most high
taxes are implemented by politicians in order to "snuff out" competition before they are at-level
with the companies that lobbied the lawmakers. The lobbyist companies are more than willing
to pay the higher tax because they are in position to pay it while newer or less-rooted companies
are not. The higher taxes said to generate more revenue for the governing body, but if taxes are
too high then the company's revenue goes more towards taxes than business expansion. Thus, the
company can neither increase growth nor earnings, and the company would soon have to fold
because it would not generate enough profit to maintain operations. If it does generate
substantial profit, the company is still restricted because so much of its revenue goes towards
taxes. The funny part is that due to the higher tax rate, the governing body's tax revenue
decreases and is restricted. There is less economic growth due to the confiscatory tax rate, less
business expansion, thus less tax revenue generated. It does not matter to the lawmaker because
he/she is already substantially compensated by the lobbyists. :)