Edwards delays tax plan

Edwards delays tax plan

Gov. John Bel Edwards was scheduled to release the details of his plan to overhaul Louisiana’s broken tax structure in a speech to the Press Club of Baton Rouge this afternoon.

Number of the Day

46.5 - Percentage of Louisiana high school seniors who do not take a full courseload. State officials are looking for ways to change this by boosting dual enrollment programs that offer college credit for high school students.

Gov. John Bel Edwards was scheduled to release the details of his plan to overhaul Louisiana’s broken tax structure in a speech to the Press Club of Baton Rouge this afternoon. But those plans were abruptly shelved over the weekend, and it now appears that the plan will be released midweek. Administration officials told Julie O’Donoghue of Nola.com/The Times-Picayune that they are still gathering information.

Legislators and fiscal policy groups have expressed concerns about Edwards’ tax strategy, which has shifted dramatically in the past couple of weeks. The governor’s team announced earlier this month that he had scrapped an approach that would have replaced some of Louisiana’s highest-in-the-nation sales tax rate with higher income tax rates, and eliminated some income tax breaks. Instead, the governor’s staff is considering pushing a gross receipts tax, which is essentially a levy on business transactions against the seller, in exchange for getting rid of the corporate income and corporate franchise taxes.

The AP’s star reporter, Melinda Deslatte, notes in her weekly column that Edwards’ push for a new levy on business gross receipts as the centerpiece of his tax package caught most capitol observers by surprise.

That wasn’t among the proposals — or anywhere in the 71-page report — offered by a task force assembled by lawmakers, with Edwards’ support, that did eight months of review before suggesting what it believed was the best tax revamp for Louisiana. “I haven’t talked to anybody who had an inkling that this was coming,” said Barry Erwin, president of the nonpartisan Council for A Better Louisiana and a task force member. “This tax seemed to be more of an outlier, and it’s not one that we really had a level of comfort with.” Edwards’ chief legislative allies have remained publicly silent about the concept, saying they don’t know enough yet. Advocacy groups that traditionally support the governor also have stayed mum. Only one lawmaker has vocally embraced the general idea of the tax.

The Advocate’s Stephanie Grace echoed similar sentiments in her Sunday column, noting opposition from the New Orleans business community and concerns from policy advocacy groups.

Speaking to the Jefferson Chamber this week, GNO, Inc. President Michael Hecht conceded that there’s a certain appeal in the idea’s “conceptual simplicity” — “just tax everybody on everything” at a superficially low rate, as he put it. But overall, he argued that it’s “bad policy” and rattled off five reasons why. … That’s at least one perspective from the business side, but gross receipts taxes aren’t necessarily popular in other corners either, including among Edwards’ natural allies. Jan Moller, who heads the left-leaning Louisiana Budget Project, said he wants to see the governor’s plan, but has general concerns that this form of taxation, like individual sales taxes, disproportionately impacts lower income people.


Health care aftermath
President Donald Trump’s plan to cut Medicaid spending by nearly $1 trillion over the next decade, eliminate health coverage for 24 million Americans and give a massive tax cut to the country’s wealthiest families died on the House floor Friday. Which begs the question: What’s next? The inimitable Jim Beam of the Lake Charles American-Press compares the House Freedom Caucus, which helped sink the GOP’s healthcare bill, to the “Gang of No” in the Louisiana House that tends to oppose any legislation dealing with taxes.

Former U.S. Rep. John Fleming, R-Minden, was a caucus member. New U.S. Rep. Mike Johnson, R-Bossier City, is a likely candidate for the group. Johnson said after Ryan pulled the GOP health care bill, “Obamacare is failing and the American people are suffering because of it. I have already signed on to co-sponsor Rep. Steve King’s bill that fully repeals Obamacare and relieves businesses and families of its burdens.” King is an Iowa Republican. “Rest assured, this fight is not over,” Johnson said.

The Advocate’s editorial board calls for bipartisan cooperation to fix the problems in the Affordable Care Act.  

U.S. Sen. Bill Cassidy of Baton Rouge has been a useful voice of moderation, too. He recently introduced legislation that would give states more flexibility to experiment with alternatives to Obamacare while providing a range of federal support to help people get insurance.  We hope Cassidy’s spirit of compromise can shape future health care debates.

The New York Times’ Paul Krugman writes that the ACA is working much better than the president has suggested, but that higher insurance subsidies and other tweaks could make the law more effective.

What about the problem of inadequate insurance industry competition? Better subsidies would help enrollments, which in turn would probably bring in more insurers. But just in case, why not revive the idea of a public option — insurance sold directly by the government, for those who choose it? At the very least, there ought to be public plans available in areas no private insurer wants to serve. There are other more technical things we should do too, like extending reinsurance: compensation for insurers whose risk pool turned out worse than expected. Some analysts also argue that there would be big gains from moving “off-exchange” plans onto the government-administered marketplaces.


Sales tax revamp in jeopardy

Louisianans pay the nation’s highest sales tax, and the ways that sales taxes are charged and collected at the state and local level makes for the most cumbersome system in the country. Yet the efforts to modernize things and forge a compromise between the various interest groups that benefit from the current system appear to be stalled. Local authorities (read: sheriffs) are balking at attempts to consolidate collections at the state level, the way it’s done in most other places. And there is no agreement on what should be subject to the tax. The Advocate’s Tyler Bridges:

The commission has come to agreement on recommending to lawmakers that they unify all but 14 types of purchases that are taxed on the local level but are exempt from sales taxes at the state level. Those 14 categories involve agriculture and medical devices. The commission sought to reach agreement on those 14 purchases at what was supposed to be its final meeting on March 15. But the meeting broke down over a dispute between the interests of businesses and local governments, and the resulting stalemate reflects the challenges lawmakers will face when they try to redo the sales tax code this year.


Scrutiny of tax exemptions

Louisiana loses billions of dollars each year to tax exemptions, credits, deductions and other favors that have been added to the tax code over the years. But state Sen. J.P. Morrell of New Orleans, who heads the tax-writing Revenue & Fiscal Affairs Committee, is looking for ways to bring such tax-code spending under control. The prolific Mr. Bridges reports:

Based on his findings, he plans this year to try to kill business tax exemptions that he believes are total giveaways, and to force supporters of others to prove their worth or see them disappear. Morrell is also seeking passage of a rule that would require the Senate to cap the cost of any new tax exemption at the amount estimated by the Legislative Fiscal Office before the Legislature votes on the measure. He noted that the Legislature has passed some tax breaks — notably for the film and solar industries — that ended up costing taxpayers exponentially more than originally estimated. … Any tax exemptions that Morrell can persuade his colleagues to dump could help the state provide more funding for the TOPS scholarship program and other programs popular with lawmakers.


Number of the Day

46.5 – Percentage of Louisiana high school seniors who do not take a full courseload. State officials are looking for ways to change this by boosting dual enrollment programs that offer college credit for high school students. (Source: The Advocate)