So, what’s the plan?

So, what’s the plan?

A couple of things are clear as the Legislature begins its second week: First, Republicans in the House (who hold the key to any tax reform deal) are unhappy with Gov. John Bel Edwards’ plan to cut taxes for 95 percent of Louisiana households and make corporations pay more to fund state government. And second, those same House Republicans are nowhere close to coming up with a plan for solving the $1.4 billion fiscal “cliff” that will come when a slew of temporary taxes expire on July 1, 2018.

Number of the Day

$58.7 million - Estimated cost to Louisiana - over five years - of eliminating the state sales tax on diapers and feminine hygiene products, which is proposed in Senate Bill 24 by Sen. J.P. Morrell of New Orleans (Source: Legislative Fiscal Office)

A couple of things are clear as the Legislature begins its second week: First, Republicans in the House (who hold the key to any tax reform deal) are unhappy with Gov. John Bel Edwards’ plan to cut taxes for 95 percent of Louisiana households and make corporations pay more to fund state government. And second, those same House Republicans are nowhere close to coming up with a plan for solving the $1.4 billion fiscal “cliff” that will come when a slew of temporary taxes expire on July 1, 2018.  The Advocate’s Tyler Bridges:

“There’s no appetite for raising more revenue,” said one committee member, state Rep. Paula Davis, R-Baton Rouge, in comments echoed by another, state Rep. Dodie Horton, R-Haughton. “You can’t tax your way out of this,” Horton said. Many legislators say the conservatives cannot simply vote no on everything. “For us collectively as a body to do nothing is unacceptable,” state Rep. Kenny Havard, R-St. Francisville, told his colleagues when he testified on Tuesday before Ways and Means in support of a tax measure he is pushing.

The governor’s office plans to file the centerpiece of its plan – a proposed Commercial Activity Tax – today. In the meantime, Elizabeth Crisp reports that Republicans remain focused on cutting the budget, without specificity.

While the House leadership doesn’t have a one-sheet plan that it can point to, like the governor, he said he believes his members are seriously considering their options. “We’ve had members file multiple bills that, I think, when you package those together, will be an interesting combination of items,” (House Speaker Taylor) Barras said. (GOP Caucus Chair Lance) Harris has said the state should evaluate tax credit programs that he said can be costly to the state with little return. Barras said he’s hesitant to call anything a “plan” because the chamber’s 105 members have different ideas and don’t operate as a monolith.

But as columnist Robert Mann writes for Nola.com/The Times-Picayune, the fact that dozens of tax bills are floating around the Capitol is no substitute for a coherent plan.

Imagine saying you are building a house. Interested, I ask, “Can I see your plans?” You reply, “Well, I have several sets of plans.” Constructing a house is like reforming a revenue system. If you have several plans, you have no plan at all. The reason Barras and his colleagues won’t get behind a plan of deep budget cuts is simple: They know that putting their ideology on paper — specifying which prisons, colleges, hospitals and DMV offices to shutter — won’t be popular. Better to throw stones at Edwards, label him a tax-and-spend liberal, vote down everything and use the resulting failure as fodder against him in three years.

 

Supply-side economics for liberals

Many economists, particularly on the right, have long taken for granted that social welfare programs serve as a drag on the economy by discouraging people from working. But as Neil Irwin reports for the New York Times’ Upshot blog, new research is challenging those assumptions by showing that some programs actually encourage people to enter the workforce and stay there.

The end result, if the research is correct, is the same: a nation that is capable of growing faster and producing more. The clearest example of a program that appears to increase labor supply and hence the United States’ economic potential is the earned-income tax credit (E.I.T.C.), first enacted in 1975 and expanded several times since then. It supplements the income of low-income workers, and numerous studies find that its existence means more Americans work than would in its absence. … Child care subsidies appear to work the same way. It’s a pretty straightforward equation that when government intervention makes child care services cheaper than they would otherwise be, people who might otherwise stay home raising their children instead work. More women work in countries that subsidize child care and offer generous parental leave than in those that don’t.

 

Stop cutting higher education

The great Jim Beam of the Lake Charles American-Press listened to the pleas of higher education officials, who collectively spent seven hours testifying before a House Appropriations subcommittee last week about their budgets. Public colleges and universities have lost about $700 million in state support since 2009, making up for some of it through tuition and fee hikes, but told legislators that they can’t stomach any more reductions.

Monty Sullivan, president of the Louisiana Community and Technical College System, continues to speak clearly and bluntly on the issue. He said last year he wasn’t going to beg for money anymore because the system he heads is graduating students who are becoming taxpaying citizens. Unfortunately, there are 18,000 available annual jobs out there, Sullivan said, but the necessary funding to train and educate students to fill those jobs isn’t there. “At a time when we are down revenue, would we want to create new taxpayers? I would think we would,” Sullivan said. “The truth is, you can’t balance the state budget on our backs,” he told members of the subcommittee. “More with less has been done.”

 

Economic mobility in the South

Louisiana is the third-poorest state in the nation. It’s also one of the hardest places for low-income families to get ahead, according to measures of economic mobility developed by Stanford economist Raj Chetty. That’s true across the South, where high degrees of concentrated poverty, racial segregation and low rates of “social capital” are holding many back from reaching their full potential. The Atlantic’s Alana Semuels visits Charlotte, N.C., for a story that could just as easily have been told from New Orleans.

Of course, some of the reasons the South is lagging behind when it comes to economic mobility have to do with very specific policy choices made by state governments. Southern states have low minimum wages, so many poor people make less than they do in other regions, and have less money to spend on creating opportunities for their children. Paltry wages negate any potential benefit that might be derived from lower housing costs or number of open positions.

 

Number of the Day

$58.7 million – Estimated cost to Louisiana – over five years – of eliminating the state sales tax on diapers and feminine hygiene products, which is proposed in Senate Bill 24 by Sen. J.P. Morrell of New Orleans (Source: Legislative Fiscal Office)