The package of tax reforms proposed by Gov. John Bel Edwards would raise enough revenue to plug the coming fiscal year’s $440 million shortfall and avoid the $1.4 billion “fiscal cliff” that looms next year when temporary taxes expire. It would generate about $411 million per year in new, recurring revenue and would provide a net tax cut to 95 percent of Louisiana families. The largest effective tax cut would go to the middle 20 percent of taxpayers – households earning between $36,000 and $56,000 per year. The details are in a new policy brief by LBP’s Nick Albares, which is based on economic modeling from the Institute on Taxation and Economic Policy.
Louisiana’s current tax structure is not sufficient to fund the state’s basic needs, let alone make necessary investments in education, public health and other critical priorities. It also is fundamentally unfair, as it requires low and moderate-income households to pay a higher effective tax rate than the very wealthiest. And because it relies on temporary revenues that are expiring in 2018, it is highly unstable. The governor’s tax plan is not perfect. But if all the elements are taken together, it would take a step toward making Louisiana’s broken tax system more fair and adequate.
Revenue raising for fairness and sustainability
The House Ways and Means committee began wading through the 140 tax bills on its agenda on Tuesday, but won’t be taking votes for the time being. The AP’s Melinda Deslatte reports that many of the bills haven’t been analyzed for their fiscal impact, and that Chairman Neil Abramson of New Orleans wants to see how various bills fit into a potential package of reforms.
Central questions of the debate include whether lawmakers want to replace all of the $1.3 billion in temporary taxes that will expire in mid-2018 and whether they want to raise money beyond that, as Gov. John Bel Edwards wants. Edwards, a Democrat, says the state must overhaul its tax structure to end years of budget instability. Some Republicans have shown resistance to anything beyond replacing the expiring revenue sources. Other GOP lawmakers have indicated they don’t want even to replace all of the temporary tax revenue, preferring to cut state government spending. It’s unclear, however, where those cuts would be made or what services would be eliminated.
Reform needs mobilization
Conventional wisdom around the Capitol is that real tax reform – the kind that makes Louisiana’s revenue structure more fair, adequate and predictable – is doomed amid opposition from conservatives in the House. But as The Advocate’s Lanny Keller reports, the public may be ahead of the politicians in evaluating the state’s fiscal problems and potential solutions.
The outside game in the arena of public opinion is one where Edwards has more advantages than perhaps he realizes. The 2017 Louisiana Survey was conducted by the LSU Public Policy Lab, and it found that 46 percent of respondents thought the state was on the right track, compared to 40 percent on the wrong track. That’s a pretty remarkable result in a state where much of the oil patch is in economic distress. … If (Edwards) and his supporters can’t get agreement by the June end of the regular session, then mobilizing for reform will be even more urgent before a fall special session. That’s not just traveling around the state to meet with legislators, as he did this year, in an inside game at outside venues. Rather, it’s coalition-building, including business people who crave a more stable tax system, as well as making the populist case for reform.
Pushing back against the DA’s
Louisiana’s district attorneys have emerged as the biggest political roadblock to criminal justice reforms that aim to reduce the state’s shameful, world-leading incarceration rate. While Louisiana’s crime rate is similar to that of South Carolina or Georgia, the Pelican State locks up far more people – mostly for nonviolent offenses. The DA’s association says that’s because many nonviolent offenders are actually violent criminals who plead down to lesser offenses. Foundation for Louisiana CEO Flozell Daniels Jr., a member of the Justice Reinvestment Task Force, pushes back in Nola.com:
They make these excuses and claims without data in an attempt to distract from the task force’s comprehensive and data-driven assessment of our state’s criminal justice system. But here are the questions they won’t answer: If a person is really violent, then why didn’t the prosecutor convict him of a violent offense? And if they have so many prior convictions as to render them dangerous repeat offenders, then why weren’t they convicted under the habitual offender statute? … Are all the supposedly nonviolent people in Louisiana’s prisons really dangerous criminals? And if they are, does that mean that Louisiana has two to three times the number of dangerous criminals that need to go to prison as South Carolina and Florida? Of course not. The people coming through Louisiana courts aren’t different from those coming through criminal courts anywhere else. They’re not worse than people in South Carolina and Florida. They’re just subject to harsher laws. The task force’s work uncovered this fact — and the scary falsehoods that the district attorneys are pushing are just plain wrong.
Number of the Day
72– Percentage of Louisianans who approve of Medicaid expansion. Only 42 percent approve of the Affordable Care Act, which is the reason for Medicaid expansion. (Source: The Louisiana Survey via LSU)