The massive tax overhaul that cleared the U.S. Senate just before 2 a.m. EST Saturday – after just a few hours of cursory review – would add at least $1 trillion to federal budget deficits and represents a major shift of wealth from low and moderate-income working families to the most powerful people and corporations. While the House and Senate still have to reconcile their differences, unless members of Congress change course, President Donald Trump will soon have legislation on his desk that adds 13 million Americans to the uninsured ranks, raises taxes on millions of families and sets the stage for damaging budget cuts in the months and years to come. LBP’s statement on the tax vote is here.
Jesse Drucker and Patricia Cohen of The New York Times look at some last-minute provisions added to the bill to win over wavering senators. Real estate developers, energy interests and banks are the big winners.
Far from simplifying taxes, the bill opened up a whole range of tactics to lower the amount owed to the Internal Revenue Service. “Business owners or managers that plan well and pay for good advice will be able to achieve much more favorable rates,” said Adam Looney, a senior fellow at the Brookings Institution and a former Treasury Department official. “I’m not sure if that is a loophole or the intent of the legislation.”
The Washington Post’s Todd Frankel visits North Carolina, which cut corporate taxes four years ago, to gauge whether tax cuts are the magic economic elixir that supporters claim (spoiler: they aren’t).
But even if the top-line numbers have improved, workers have not seen huge benefits. The median hourly wage in North Carolina grew roughly on par with the national rate, while the average hourly wage and annual wage grew notably slower, according the federal Bureau of Labor Statistics.
WWL-TV has reaction from Louisiana’s senators – who voted yes – along with the general public and LBP.
Criminal justice critics emerge
Attorney General Jeff Landry and U.S. Sen. John Kennedy kept silent last spring while a bipartisan coalition of law enforcement leaders, faith leaders and reform advocates united around a package of reforms aimed at reducing Louisiana’s world-leading incarceration rate. But now that the reforms are law and nonviolent offenders are earning early release from prison, Landry and Kennedy are criticizing. The AP’s Melinda Deslatte reminds us of how we got here:
The bills championed by the governor expand probation and parole opportunities and shrink sentences, mainly for nonviolent offenders. They ease financial burdens inmates face upon release. And they require most of the savings from the reduction in prison population to be spent on treatment and training programs aimed at keeping exiting inmates from returning to crime. The criminal justice revamp won support from state lawmakers with the backing of a wide-ranging coalition that included faith-based groups, business leaders and progressive organizations. The influential and conservative Louisiana Family Forum was on board, as was the Louisiana Association of Business and Industry and the American Civil Liberties Union. The nonpartisan Pew Charitable Trusts provided data analysis and technical assistance.
Medicaid work requirements don’t work
In Louisiana and elsewhere, conservative politicians are pitching Medicaid work requirements as a way to cut health care spending. But as Rachana Pradhan and Brianna Ehley of Politico report, those efforts would undermine state efforts to address the opioid epidemic by cutting off access to drug treatment and other supports that can help addicts recover.
People with addiction issues face a number of hurdles to obtain employment, including employers that drug test their prospective employers. More than half of all employers require job candidates to take drug tests, according to a study by the Society for Human Resource Management. Relapse is also common. Nationally, the National Institute on Drug Abuse estimates that relapse rates for addiction range from 40 percent to 60 percent. “People cannot get a job because they can’t pass a drug test,” (Matt) Brooks (chairman of Indiana’s Medicaid Advisory Board). “So now, not only can you not get a job because of substance use disorder, but you’re not going to have access to health care … and then where does that leave you?”
Tax incentives and economic development
The Advocate’s editorial board reacts to the news that Sasol Corp. cancelled plans for a multibillion-dollar gas-to-liquids (GTL) plant near Lake Charles. While the factory was in line to receive up to $200 million in state tax giveaways, those incentives weren’t the reason the company initially picked Louisiana. As the newspaper reminds us, market conditions are the most important factor behind investment decisions.
Sasol is still a huge investor in Louisiana, and we welcome the company’s commitment to its existing plant. Most places in the United States would celebrate an $11 billion industrial facility, after all, as a huge economic win. The state’s investment in these projects is controversial these days. Sasol, for example, was to receive about $200 million in state dollars for various incentives. What the announcement means is that incentives aren’t as important as politicos seeking credit for these plants would have people believe. Market conditions and prices are in the driver’s seat.
Number of the Day
65 – Days since funding for the Children’s Health Insurance Program (CHIP) expired. More than 120,000 Louisiana children are enrolled in the program, which is scheduled to run out of money by February. (Source: Staff research)