Wednesday, January 14, 2015

Wednesday, January 14, 2015

Taxing the poor; Louisiana families struggle for economic security; State on track to recover $10 million in debt; and As oil prices crater, natural gas activity could increase

Taxing the poor

A study released this morning by the Institute on Taxation and Economic Policy (ITEP) and the Louisiana Budget Project finds that the lowest-income Louisianans pay more than twice as much in taxes as a percent of their income compared to the state’s wealthiest residents. The study, Who Pays?, analyzes tax systems in all 50 states and factors in all major state and local taxes, including personal and corporate income taxes, property taxes, sales and other excise taxes. In Louisiana, the poorest 20 percent of non-elderly households, who earn less than $17,000 per year, pay 10 percent of their incomes in state and local taxes. The richest 1 percent of households, which have incomes above $471,000, pay just 4.2 percent.

 

The New York Times cites research showing that most Americans – regardless of party affiliation – believe in a progressive tax system that asks the wealthiest to pay more.

 

Rather than relying on experts’ opinions, WalletHub, a consumer finance information and social networking site, surveyed taxpayers for a definition of fairness when it did its own analysis of state tax systems last fall. “Let’s not try to guess what is fair and what is not,” Odysseas Papadimitriou, the chief executive of WalletHub, explained, “Let’s ask Americans.”

 

“We were surprised to find both liberals and conservatives believe that the most fair system is a progressive one — taxing the poor less than the rich,” he said. “They disagreed how much, but they agreed that it should be progressive.”

 

Read LBP’s take on the report here.

 

Louisiana families struggle for economic security

A new study by Loyola’s Jesuit Social Research Institute finds that one of three  married-parent families and four in five single-mother households in Louisiana are not earning enough to be  economically secure. The report, “Too Much for Too Many,”  cites the state’s low wages, high housing costs, expensive health care and hard-to-find child care as factors in more than 224,000 Louisiana families’ struggle to meet their basic needs. As Nola.com reports:

 

According to the study, the average income a Louisiana single parent needs to meet a family’s basic needs is $45,840 with one child, $56,556 with two children and $70,464 for a parent with three children. For married parents, the average household income needed is $55,428 with one child, $62,220 with two children and $75,756 for those with three children.

 

Yet even these income estimates seem conservative. They account for spending on food, housing, health care, child care, housekeeping expenses, taxes and emergency savings of 7 percent. But researchers included educational costs of just $34 to $61 per month, depending on the size of the family. Their calculations did not account for costs like private or higher education, internet access, retirement savings and charitable contributions.

 

The report recommends raising the state’s match to the federal Earned Income Tax Credit, creating a state minimum wage of $10.10 per hour, and expanding Medicaid.

 

State on track to recover $10 million in debt

The newly created Office of Debt Recovery is on track this year to collect $10 million in debt owed to the state.  While the money won’t help lawmakers plug budget holes because the projected collection was already included in the budget, it does take a small bite out of the over $1.1 billion owed to the state.  Revenue Secretary Tim Barfield estimates that at the cost of a few million dollars per year, the state will eventually be able to collect up to $25 million annually.

Treasurer John Kennedy and Rep. Chris Broadwater, R-Hammond and sponsor of the legislation creating the office, praised the work done so far. “Long-term, there’s no doubt in my mind that this is a good bang for the buck,” Kennedy said. “It’s not going to go as quickly as we’d like. There are going to be some problems we didn’t anticipate. But once we get the bones, the infrastructure established, I think we’ll see the monetary rewards.”

 

As oil prices crater, natural gas activity could increase

The head of the Louisiana Oil and Gas Association is once again bullish on the Haynesville Shale, telling The Advocate that the falling price of oil has revived interest in drilling for gas in northwest Louisiana.

 

Comstock Resources has already announced it will move rigs from other oil formations back to the Haynesville, (LOGA President Don) Briggs says in his weekly column. He cites the industrial expansion along the Gulf Coast, much of which relies on natural gas, and the deployment of the first U.S.-based gas-to-liquids facility in Lake Charles as additional reasons to be bullish.

 

 

Number of the Day

86,232 – The number of married-couple families with one to three children who lack incomes that meet the family economic security estimate for Louisiana. (Source: Jesuit Social Research Institute)