Friday, May 16, 2014

Friday, May 16, 2014

EITC improves tax fairness and reduces poverty; Blame Bobby? Not so fast; Louisiana has second-highest percentage of federal dollars in state budget; New technology requirements strain pre-school budgets; New rule may hurt people with chronic illnesses; and Gov. Jindal using Russian money to balance budget. 44.3 — The percentage of the Louisiana budget that is made up of federal money. (Source: Tax Foundation)

EITC improves tax fairness and reduces poverty
A new report by the Institute on Taxation and Economic Policy looks at the way states can make their tax systems fairer to low-income families by boosting their Earned Income Tax Credits.  “The simplest, most effective, and most targeted way to begin to counteract regressive state tax codes is a refundable state Earned Income Tax Credit (EITC). Twenty-five states and the District of Columbia already have some version of a state EITC. Each one is modeled on the federal credit, making it easy for taxpayers to claim and simple for state tax officials to administer. This report explains how all states – even those who already have some form of the credit – can use the state EITC as a tool for improving the fairness of their state tax code.”

Louisiana’s state EITC is 3.5 percent of the federal credit, the lowest among the states that have a credit. Click here to read LBP’s blog about the new report.

Blame Bobby? Not so fast
While it’s often fashionable to blame Gov. Bobby Jindal for the mess that’s been made of the state budget, The Advocate’s editorial board reminds us that the Legislature is not exactly an innocent bystander, and that the reckless tax cuts that put Louisiana on this harmful path have bipartisan origins. “This didn’t start with Jindal, but began with some tax cuts in the administration of Gov. Kathleen Blanco. If Jindal has certainly made the situation worse, who voted for reckless tax cuts in the Legislature? It wasn’t the governor pushing those buttons in the House and the Senate.”

Louisiana has second-highest percentage of federal dollars in state budget
Lawmakers have continuously denied health coverage to 400,000 low-income Louisianans, in part because they claim the expansion would balloon the already swollen federal government budget. But, a new report from the Tax Foundation shows that they generally have no qualms about pocketing federal money. Louisiana trailed only Mississippi in the amount of federal money it takes, as a percentage of overall state revenues. Federal dollars account for more than 44 percent of the state’s budget.

New technology requirements strain pre-school budgets
Pretty much all state services are being asked to “do more with less” in this era of austerity in state government. One particularly poignant example is the state’s pre-schools, where research has shown that the state gets one of the best returns on its investment. Now, those schools are struggling to come up with funding for technology upgrades required by new academic standards. According to, the state is funding those upgrades for 29 parishes this year, but does not have a plan for funding the additional 35 parishes that will come on board next year.

New rule may hurt people with chronic illnesses
People who rely on charities and non-profits to afford health coverage for their chronic conditions may soon be out of luck, thanks to a new federal rule, which allows insurers to reject payments from such organizations. “One provider, Blue Cross and Blue Shield of Louisiana, has cited the March Affordable Care Act rule to inform policyholders that they are no longer accepting premium payments from non-profits. The new Affordable Care rule governing charitable subsidies has also drawn a rebuke from two Louisiana lawmakers — Sen. David Vitter, R-La, and Rep. Bill Cassidy, R-Baton Rouge. Both opposed the Affordable Care Act, but say the new rule doesn’t make sense and will hurt patients.”

Gov. Jindal using Russian money to balance budget
Some legislators are having heartburn over an economic development deal with a Russian petrochemical giant inked by Gov. Bobby Jindal’s administration, Jeremy Alford reports in LaPolitics. Funding from Eurochem, which is planning a facility in St. John the Baptist Parish, has added $12 million for next year’s budget. But some lawmakers are wondering if Louisiana should be doing business with the company given Russia’s invasion of the Crimea region of Ukraine. “With the company receiving financing from Russian state banks, and the government of Ukraine readying itself for an invasion by the country’s forces, the money doesn’t sit right with some. ‘I’m worried about that money coming from Russia,’ said Rep. John Bel Edwards, D-Amite. ‘I’m not trying to embarrass anyone, but I think we can avoid future embarrassment by taking a hard look at where we’re going with this. Do we really want to be in bed with a country that has sanctions against U.S. citizens?’”

44.3 — The percentage of the Louisiana budget that is made up of federal money. (Source: Tax Foundation)