Exxon wins approval for ITEP

Exxon wins approval for ITEP

A state panel granted ExxonMobil Corp. a 10-year partial exemption on property taxes for a proposed expansion of its Baton Rouge operations that would create up to 60 new permanent jobs.

Number of the Day

229,000 - Number of children in Louisiana who will receive no increase, or a small increase of less than $75 from the Child Tax Credit under the 2017 tax law. (Source: Center on Budget and Policy Priorities)

A state panel granted ExxonMobil Corp. a 10-year partial exemption on property taxes for a proposed expansion of its Baton Rouge operations that would create up to 60 new permanent jobs. It was the first major project approved under the latest rules crafted by the state economic development department for the Industrial Tax Exemption Program. Under the new rules, manufacturers are exempt from 80 percent of their property taxes for 10 years, provided local taxing authorities also agree. The Advocate’s Sam Karlin breaks down what’s in deal.

Exxon’s tax break would be worth $5.7 million in the first year, and the firm would pay 20 percent property taxes for a decade. The company said it would pay $6.9 million in property taxes over the life of the 10-year exemption, along with $32 million in sales taxes. The company said the project would create 45 new direct jobs, 20 permanent contractor jobs and 600 construction jobs at peak development, if it moves forward. The project would double the plant’s polypropylene production, said plant manager Angela Zeringue, largely serving the automotive market. Those 65 new jobs would be in place by the middle of 2021, Zeringue said. The project is part of a 10-year, $20 billion “Growing the Gulf” initiative by Exxon to expand manufacturing capabilities in the region.

(Full disclosure: LBP Director Jan Moller is a member of the Board of Commerce & Industry)

 

Paying more for ‘principles’
Louisiana’s decision to ban two banks from bidding on a $600 million bond issue means state taxpayers are likely to pay more than necessary for future transportation upgrades. The Advocate’s Mark Ballard revisits the Bond Commission’s recent move to exclude Citigroup and Bank of America because of their gun-control policies. With fewer competitors, chances are Louisiana will face a higher interest rate. But the overall impact won’t be significant when measured out over the 12-year life of the bonds.

In the wake of high profile mass shootings, including the Feb. 14 murder of 17 people at a Parkland, Fla. high school, Citigroup announced it would no longer do business with retailers peddling high capacity magazines or selling guns to anyone who hasn’t passed a background check or is under the age of 21 with a few exceptions. Bank of America no longer will loan money to manufacturers of military-style weaponry for the public. Attorney General Jeff Landry called the corporate policies “fascism at its best.” A Citi executive said the guidelines are like the protocols large retailers adopted on their own.

 

More bad news from new tax law
The increase in the maximum value of the Child Tax Credit (CTC) included in the 2017 tax law was ostensibly aimed at helping low-income working families. However a new analysis from the Center on Budget and Policy Priorities shows that the opposite is true, as the largest increases are going to high-income families. Under the new law, 11 million children, including 229,000 children in Louisiana, will receive no increase, or a small increase of less than $75. Fifteen million more children will receive an increase of more than $75, but less than the maximum increase of $1,000. The law also ends the CTC for 1 million children in working immigrant families.

The 2017 tax law was an opportunity to make needed improvements to the CTC and EITC, but low- and moderate-income working families — and the tax credits best equipped to help them — were largely an afterthought. Instead, the law focuses its tax cuts on those at the top: by 2025 it will boost the after-tax incomes of households in the top 1 percent by 2.9 percent, roughly triple the 1.0 percent gain for those in the bottom 60 percent, the Tax Policy Center found. This is one reason — in addition to its high cost and the opportunities it creates for high-income filers to game the tax system and avoid taxes — that the 2017 tax law should be fundamentally restructured as soon as possible. That restructuring should include substantial boosts in both the CTC and EITC.

 

Hospitals are cashing in on discounted drug prices
Many hospitals that serve low-income and uninsured patients rely on a program that requires pharmaceutical manufacturers to sell the hospitals drugs at discounted prices. The 340B program allows the hospitals to charge more for drugs than they paid for them and keep difference. The intent of the program is for hospitals to use the profits generated from the discounted prices to provide low-income patients with a broader range of services. There are concerns, however, that some hospitals are receiving the benefits of the program without providing the services in return. Austin Frakt, writing for the New York Times’ Upshot Blog, reports.

A study published in JAMA Internal Medicine found that the early participating hospitals were more likely to be located in poor communities with higher levels of uninsured people, to spend more of their budget on uncompensated care, and to offer more low-profit services than hospitals that started participating later. “The 340B program may produce the results intended at some hospitals,” said Sayeh Nikpay, an assistant professor at Vanderbilt University and a co-author on the study. “But as the program grew, it benefited many hospitals with less need for assistance in serving low-income populations.” Other research corroborates that hospitals aren’t using the 340B program as intended. A study in The New England Journal of Medicine was unable to find any evidence that profits from 340B have led to more access to care for low-income patients, or reductions in mortality rates among them. Another study in Health \Affairs found that 340B hospitals have increasingly expanded into more affluent communities with higher rates of insurance.

 

Number of the Day
229,000 – Number of children in Louisiana who will receive no increase, or a small increase of less than $75 from the Child Tax Credit under the 2017 tax law. (Source: Center on Budget and Policy Priorities)