The debates taking place now between the members of the Task Force on Structural Changes in Budget and Tax Policy are only a precursor to the ones ahead, when the Legislature will attempt to overhaul Louisiana’s broken tax system while replacing $1.3 billion in temporary taxes that are coming off the books in 2018. The inimitable Jim Beam of the Lake Charles American-Press looks ahead at the complex task facing lawmakers.
The sales tax is a perfect example of the fight ahead. Everyone agrees the earlier a temporary 1 percent increase approved at a special session this year goes off the books, the better. Louisiana’s 5 percent sales tax is the highest in the country, and it automatically reverts to 4 percent July 1, 2018. The tax raises some $880 million annually, so how do you recoup those funds considered necessary to keep state government running? Many states tax services like barber and beauty services, cable television, home repairs, debt collections and a host of other personal services. It’s not a popular alternative. States have turned to taxing services because Americans are changing their buying habits. Sales taxes are down because consumers are buying more and more goods online, and Congress is reluctant to start taxing Internet sales.
Amusing ourselves into bankruptcy
The Advocate’s editorial board looks at the shuttered Six Flags amusement park in New Orleans east as a metaphor for everything that has gone wrong with Louisiana’s generous system of tax incentives and subsidies. Decades ago the park received a $25 million loan, which the city is still paying back to the tune of $2.2 million a year. And recently it played host to Deepwater Horizon, the Hollywood movie that has cost Louisiana taxpayers more than $38 million.
Making a government-subsidized motion picture on the site of a government-subsidized amusement park is not the way to grow Louisiana’s economy. The state gave as much money to Deepwater Horizon as it spent this year on its two public universities in New Orleans, UNO and SUNO – institutions which actually boost the economy by training young people for the jobs of tomorrow. Louisiana’s taxpayers are groaning under the weight of more than $1 billion in temporary sales taxes. When those taxes expire, legislators are going to have to come up with a new way to balance the state budget. They should start by curtailing our addiction to giveaways.
Surprise in inequality
The economic gap between white male workers and their black counterparts continues to widen. New research by the Economic Policy Institute finds that the gap is growing faster among those with more education. The Washington Post’s Jeff Guo reveals why a college diploma is no longer a surefire way of narrowing the racial pay gap.
Among early-career men, for instance, the earnings disparities between white and black workers have widened by about 3 percent since 1979. These disparities would have been even wider had African Americans not made gains in college attainment during this time. But that educational progress was overshadowed, the researchers say, by two major forces: increasing discrimination and increasing income inequality. “We have minimum wages, but there isn’t a wage ceiling,” Wilson said. “There’s much more room for discrimination and inequality at the top. What’s happened is that the top one percent have really pulled away.” Income growth in recent decades has been limited, more or less, to the highest echelon of earners, a group that is overwhelmingly white. Out of every 1,000 households in the top 1 percent, only two are black, while about 910 are white. And so, as economic forces lifted the incomes of the 1 percent, the blacks on lower rungs of the economic ladder have been largely left behind.
The state Department of Education has been awarded a $67 million federal grant to overhaul teacher training. The Advocate’s Will Sentell reports it’s one piece of the financing puzzle needed to ensure that teachers are as prepared as possible when they enter the classroom.
The grant is supposed to aid 16 rural school districts with 137 schools, including two charter schools. It is also aimed at answering concerns about the costs of mentorships in rural areas. Dollars would be used to help finance stipends for undergraduate students and mentor teachers, among other areas. State Superintendent of Education John White said last month he envisions $1,000 stipends for teachers who serve as mentors and $2,000 for students being trained as teachers. … Jeanne Burns, assistant commissioner for teacher and learning initiatives for the Board of Regents, said last month it is unclear how the overhaul will be paid for in the long run. Others said the financing is especially critical amid state budget problems, including a $24 million cut in state aid for public schools earlier this year and a series of reductions to colleges and universities in recent years.The state is also pursuing other ways to finance the overhaul, said Hannah Dietsch, assistant superintendent for talent.
Number of the Day:
3 – Percentage growth in personal consumption in Louisiana in 2015. The national average was 3.6 percent and the Southeastern average was 3.5 percent. (Source: Bureau of Economic Analysis)