Monday, December 8, 2014

Monday, December 8, 2014

Gubernatorial candidates discuss state budget woes; Baton Rouge and NOLA chambers defend economic development tax incentives; ICYMI: Why the federal EITC should be made permanent; Creating pathways of opportunity for ex-convicts

Gubernatorial candidates discuss state budget woes
The Advocate ended its landmark eight-part “Giving Away Louisiana” series by asking the four major candidates for governor about the state’s runaway programs of tax-code giveaways and how they would seek to solve Louisiana’s chronic structural budget gaps. Each of the candidates — state Rep. John Bel Edwards, Public Service Commissioner Scott Angelle of Breaux Bridge, Lt. Gov. Jay Dardenne of Baton Rouge and U.S. Sen. David Vitter of Metairie — blasted Gov. Bobby Jindal’s handling of the budget and agreed on the need to re-examine tax incentives. But none of them said they would push for outright tax increases, and no one was willing to say which tax breaks they would seek to modify or kill.

The newspaper did shed some light on the candidates’ priorities: Dardenne remains a huge fan of the state’s film tax program, which he helped create in 2002. Angelle believes Louisiana’s generous tax break for fracking wells — which has saved profitable oil and gas corporations $1.2 billion over the past five years — has spurred investments and job creation in that industry. Vitter wants to maintain the state’s megafund, a discretionary pot of money the state uses to lure economic development projects like IBM. And Edwards said he would be guided by recommendations from a tax study currently being conducted by LSU economist Jim Richardson and due out this spring.

The editorial writers wrapped things up with a Sunday editorial calling for reform, starting with the next governor.

The future of the tax breaks will take center stage in next year’s gubernatorial race. To pay for the giveaways, the state has implemented massive cuts to higher education, forcing increases in tuition that are piling debt on our young people. Young voters should demand better, and so should their parents.


Baton Rouge and NOLA chambers defend economic development tax incentives
The CEOs of the Baton Rouge Area Chamber and Greater New Orleans Inc. responded to the series with a guest commentary in The Advocate that defend the use of tax breaks to lure companies to the state. Adam Knapp and Michael Hecht credit economic development incentives for playing “a critical dual role of first attracting attention to a state that has historically been ignored, and second, of providing a difference in the final decision against stiff competition, like Texas.” But they note that some exemptions should be redesigned (without giving specifics) and call for a simpler tax code with lower rates.

Left unmentioned is the role that incentive programs have played in draining the state’s ability to finance public services like higher education, healthcare and public safety, and the fact that most tax exemptions aren’t reviewed by the Legislature after they are passed.


ICYMI: Why the federal EITC should be made permanent
As Congress and the White House continue sparring over the fate of more than 50 business tax breaks, Forbes writes that federal officials should make changes to the Earned Income Tax Credit and Child Tax Credit permanent:

The pieces of the CTC and EITC in play are relatively inexpensive ways to promote work and family. The CTC provision is particularly well targeted to low-income households and EITC benefits flow to low- and middle-income households. Combined, the two refundable credits reduced the poverty rate from 19 percent to 16 percent in 2012 (using a supplemental poverty measure that includes taxes and transfers). That’s a big impact – and we should not chip away at it. Both refundable credits were made more generous—but only temporarily—in the 2009 stimulus law. The 2013 fiscal cliff deal continued the expansion through 2017.

Research shows that the EITC encourages work, increases household incomes and improves children’s academic outcomes. Additionally, both credits are good for small businesses and local economies because they helps families keep more of what they earn, which they spend at businesses in their communities or use for the things that make work possible—like transportation and child care.


Creating pathways of opportunity for ex-convicts
One in three Americans face lifelong barriers to economic opportunity because they have a criminal record, according to a new report from the Center for American Progress. While many of these individuals have either minor offenses or arrests that didn’t result in convictions, they still face higher risks of poverty because of limited access to employment, housing, public assistance, education and credit. Some research indicates that the national poverty rate would have dropped 20 percent between 1980 and 2004 if federal and state policies did not criminalize poverty and homelessness.

Estimates put the cost of employment losses among people with criminal records at as much as $65 billion per year in terms of gross domestic product. That’s in addition to our nation’s skyrocketing expenditures for mass incarceration, which today total more than $80 billion annually.

CAP recommends several federal and state policies to reform the criminal justice system and provide ex-convicts with pathways out of poverty, including expanding Pell Grant access, ensuring fairness in hiring and strengthening the EITC to benefit workers with criminal records.


Number of the Day
$535 million
– State funding for higher education in fiscal year 2015, down from $1.13 billion in fiscal year 2009. (Source: The Advocate)