The efforts to reform Louisiana’s broken tax structure hit a massive roadblock Tuesday when the House Ways and Means Committee rejected legislation to do away with an unorthodox tax break. A package of bills by Rep. Rob Shadoin, modeled on a recommendation from a tax reform task force, would have eliminated the ability to deduct federal income taxes on state returns, while reducing income-tax rates by 1 percentage point across the board. The bill would have provided an income tax cut for 90 percent of Louisiana households. But the committee rejected the bill on an 11-7 vote that fell mostly along party lines. The Advocate’s Tyler Bridges:
State Rep. Jay Morris, R-Monroe, questioned the bill because it would make the state’s tax system more progressive. Louisiana’s tax system currently is regressive, meaning that the poor pay a higher percentage of their income in taxes than the wealthy, according to the Institute on Taxation and Economic Policy, a Washington, D.C.-based group that works with the Louisiana Budget Project. Families that earned $17,000 or less in 2015 paid 10 percent of their income, the group found, while families that earned at least $470,000 paid only 4.2 percent
The panel also rejected a bid by Rep. Kenny Havard that would have replaced the corporate income and franchise tax with a new business levy that was projected to raise an additional $230 million per year.
Just before the committee rejected it on an 11-2 vote, Havard let loose in an extraordinary way against the business lobbyists in the committee room. “If we don’t have the courage to do it now,” Havard said, “for God’s sakes, [because] we might upset some of the people sitting behind us? … Let’s just keep what we’ve been doing for the past 20 years. Isn’t that the definition of insanity?”
While committee members appear mostly uninterested in solving the $1.3 billion “fiscal cliff” that occurs in 2018, they did take steps that could worsen Louisiana’s revenue problems in future years.
On Tuesday, the committee approved a more generous tax break for construction projects that the legislative staff estimated could cost tens of millions of dollars. The committee approved … The committee then approved House Bill 444 at the behest of business interests and several local government groups that would allow businesses to pay for infrastructure projects upfront in lieu of property taxes. HB444, by state Rep. Alan Seabaugh, R-Shreveport, also won approval without a recorded vote. House Bill 180 by state Rep. Thomas Carmody, R-Shreveport, would take away the governor’s power to decide whether businesses would win exemptions from local property taxes.
Tax cuts vs health coverage
The United States Senate can either cut taxes for the wealthy or preserve health coverage for millions of Americans who have gained it through the Affordable Care Act. But it cannot do both. That’s the central dilemma facing lawmakers in Washington as they try to make good on two of President Trump’s central campaign promises. Noam Levey of the Los Angeles Times writes about the rules governing budget reconciliation and the fundamental math facing policymakers:
“It’s not that complicated. … If you want to use money for tax reform, you can’t have it for health coverage,” said Gail Wilensky, a veteran Republican health policy expert who ran the Medicare and Medicaid programs under President George H.W. Bush. “You can’t do both.” “The math is pretty clear,” said Edwin Park, vice president for health policy at the liberal Center on Budget and Policy Priorities. “They are sharply cutting Medicaid and insurance subsidies to pay for tax cuts.” Whether GOP senators will be able to moderate the reductions in healthcare assistance remains unclear.
Inventory tax continues
A plan to phase out local property taxes on business inventories – much criticized by corporate lobbyists – could not get enough votes to pass the state Senate on Tuesday. While businesses that pay the tax get most of their money reimbursed by the state, reformers have said the tax is outmoded. But local governments that rely on the revenue have pushed back. Again, the Advocate’s Tyler Bridges with the story.
Assessors, sheriffs, school boards and municipal elected officials all opposed the bill for fear that the local taxes would not make up the difference. The Louisiana Association of Business and Industry and the Louisiana chapter of the National Federation of Independent Business supported [Sen. Bret] Allain’s effort. He told his colleagues that his proposal would save the state $300 million to $400 million per year because of the inventory tax’s unique structure.
Women’s equality helps economy
Federal Reserve Chair Janet Yellen said empowering women in the workplace is critical to boosting U.S. economic growth. It was a rare foray into social policy for a chair who typically offers opinions on macroeconomics and interest rates. But Yellen broke a glass ceiling herself as the first woman to run the country’s central bank. Danielle Paquette shares some of the speech at the Washington Post Wonk Blog.
“A number of factors appear to be holding women back,” [Yellen] said…“including the difficulty women currently have in trying to combine their careers with other aspects of their lives, including caregiving.” The remarks broke the norm for a leader who typically sticks to monetary policy, prompting praise on Twitter from liberal lawmakers. “One recent study estimates that increasing the female participation rate to that of men,” Yellen said, “would raise our gross domestic product by 5 percent.”
Louisiana ranked the second worst state to live in for working moms because of pay inequality, high female unemployment, and low quality of child care.
Number of the Day
47– Louisiana’s ranking for senior health, an improvement from 50th last year. (Source: 2017 America’s Health Rankings Senior Report)