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Race neutral tax policy is an illusion

Posted on February 15, 2019

Tax policies play a vital role in affecting government’s ability to fund services and raise the necessary revenue to provide goods to its citizens. The gap between the wealthy and those in middle class and working poor continues to grow. But solely focusing on class inequality misses a bigger picture on how tax policies have created and preserved injustices to communities of color. Tax policies have created opportunities in wealth for white families while denying it for others. Misha Hill, Alan Essig, Meg Wiehe, Jenice Robinson, Steve Wamhoff and Carl Davis of the Institute on Taxation and Economic Policy reflects on how taxation sees race.  

The tax code is both a symptom of and instrument of systemic racism. We cannot simply state that white communities have more income and wealth than communities of color without recognizing the long history of social and economic policies that lead to this divide. Dismantling policies that unfairly perpetuate white economic advantage requires an understanding of the forces that created the advantages and the current policies that ingrain them. The tax code will not be the panacea that ends racial disparities in the United States, and a race equity lens alone will not ensure a progressive and sustainable tax code for all. But if a majority in this nation are truly invested in securing public policies that create a more inclusive society, we must recognize that tax policy contributes to pernicious race and class divisions.

 

Teacher pay raises are a must
Teachers across the nation have taken to strike to fight for better pay and more funding for education. In Louisiana, the fight for better pay will play out at the Legislature this spring. Public school teachers have not seen a statewide pay increase for almost a decade. As lawmakers prepare for the upcoming session, teacher pay must be a priority. The Gambit’s commentary has more:  

The last major statewide teacher pay increase was more than a decade ago, under then-Gov. Kathleen Blanco. Working with lawmakers in a bipartisan fashion, Blanco helped raise teacher pay to the southern average. Teachers also got a $1,000 pay hike from Gov. Bobby Jindal and lawmakers in 2008, but overall state funding for teacher pay has been “stagnant” since then, according to the LBP report. Since 2008, tax cuts touted by Jindal and so-called fiscal “conservatives” forced the Board of Elementary and Secondary Education to stop giving teachers annual cost-of-living raises that would have kept up with inflation. Today, Louisiana teacher pay varies widely from parish to parish, but the LPB report says the average compensation is $49,244, which is more than $2,000 below the southern regional average. Edwards is proposing at least a $1,000 annual pay hike for classroom teachers and a $500 raise for other school personnel, such as cafeteria workers.

 

Federal Government is  failing to regulate student loans
The rising cost of college has forced many students to take on massive debt to get an education. Student loan servicers have been accused of taking advantage of students and failing to give adequate information. There’s now comprehensive, objective proof of this by the Department of Education’s own independent watchdog. The agency’s Inspector General released a report Thursday that showcased how loan servicers are failing to do their job, and the Department of Education is looking the other way. Cory Turner of NPR has more:   

The inspector general’s office writes that, without looking more broadly, the department ignored the possibility of patterns of failure by servicers that could result in “increased interest or repayment costs incurred by borrowers, the missed opportunity for more borrowers to take advantage of certain repayment programs, negative effects on borrowers’ credit ratings, and an increased likelihood of delinquency or even default.” Colleen Campbell studies the loan servicing industry at the Center for American Progress and says this audit “brings to light issues that we have thought existed for a long time but that we couldn’t say for sure were happening across the entire system. And, as time has gone on, we’ve been increasingly certain that Federal Student Aid wasn’t properly overseeing servicers. And this really confirms that that’s the case.” The audit documents several common failures by the servicers, among them, not telling borrowers about all of their repayment options, or miscalculating what borrowers should have to pay through an income-driven repayment plan.

 

Sales tax across America
The average Louisiana resident pays $900 per year in state sales taxes – putting the state near the middle of the pack (No. 28 overall) according to the conservative Tax Foundation. That’s well below Hawaii ($2,269) and Washington ($1,959) but far above Alabama ($545). As Laura Maggi of Route Fifty reports, the foundation’s rankings don’t count local sales taxes:

For example, while Louisiana collected $900 per person in state sales tax in 2017, coming in at number 28 in the group’s rankings, the state has the second highest combined sales tax rate in the country when local taxes are figured in. The state has one of the highest average local sales tax rates, which critics have bemoaned as regressive because taxes on purchases hurts poor people disproportionately. In all, 45 states and the District of Columbia collect state sales taxes, while local sales taxes exist in 38 states, according to a January 2019 Tax Foundation report.

 

Number of the Day
$0  – The amount of federal income taxes paid by Amazon Corp. In 2018 on $11.2 billion in profits. (Source: Institute on Taxation and Economic Policy)

 

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