The Louisiana Legislature will gavel in for a two-month “fiscal” session on Monday. With statewide elections looming in October, expectations are dim that much will get done beyond passing a budget. Even the seemingly simple task of agreeing on a revenue forecast has managed to become politicized, despite the fact that the state’s finances are finally in decent shape after a decade of shortfalls. The Advocate’s editorial board explains its low expectations for meaningful reforms in this year’s session:
State finances are in better shape, because of an increased sales tax and a hodgepodge of business tax increases. Virtually no lasting improvement in the tax code has been made, in part because every change is hobbled by resistance from vested interests; members of House and Senate may swagger in the gilded cage but they are increasingly looking over their shoulders for fear that outside pressure groups will bombard their districts with inflammatory social media posts.
The AP’s Melinda Deslatte offers a similarly dour curtain-raiser, and noting that Edwards and Attorney General Jeff Landry will be jockeying over Landry’s attempt to kill the Affordable Care Act.
This session, Landry’s pushing legislation to enact some of the federal law’s health protections into state law, such as prohibiting denial of insurance for pre-existing conditions. Edwards is pushing a similar measure, while the two men slam each other. Landry says the federal law is unconstitutional overreach, and Edwards says Landry’s now trying to fix a problem he’s helping to create.
The Advocate has a helpful look at some of the major issues lawmakers will be debating.
Reality check: A year ago no one expected lawmakers to pass historic legislation requiring unanimous juries, or to re-enfranchise more than 30,000 formerly incarcerated people. A lot can – and probably will – happen between now and June 6 that nobody is expecting. From tax reform to minimum wage, from equal pay to paid family leave and funding for early childhood education, there is much the Legislature can accomplish if members muster the political will.
Perception vs reality on taxes
Louisiana’s income tax rates and brackets haven’t changed since 2009. The Legislature raised the state sales tax in 2016, then lowered it in 2018, but left it higher than it was before the 2016 increase. Those are facts. But the news hasn’t filtered down to every Louisianan, as the latest release from the 2019 Louisiana Survey by LSU’s Reilly Center makes clear. As author Michael Henderson details, nearly half the state thinks income taxes are higher than they were four years ago, and more than one-third believe they’re higher than they were a year ago.
These misperceptions may play a role in the recent spike in anti-tax attitudes in Louisiana. The percentage of Louisiana residents who say the state income tax is too high and the percentage who say the state sales tax is too high both rose steadily from 2016 to 2018. … Both of these percentages fell in the past year, but they remain significantly higher than in 2016.
In the public’s defense, state income tax collections are indeed rising, but it’s not because rates are higher. It’s because of the state’s absurd federal income-tax deduction, which results in state taxes going up when federal income taxes decrease. The public also has a pretty good sense about the sales tax, but even here there are major misperceptions:
Sixty percent of Louisiana residents correctly say that the state sales tax is higher than four years ago. However, 40 percent incorrectly believe that the state sales tax rate is higher than one year ago.
Auditing the ultrawealthy
An eight-year campaign to defund the Internal Revenue Service has resulted in an agency ill-equipped to audit the increasingly sophisticated tax returns of the very rich. Wealthy tax cheats have benefited most from this situation, skipping out on their obligation to contribute to the common good, while leaving our government with less money to invest in the programs that help level the playing field for the rest of us. In the United States, you’re more likely to face an IRS audit if you’re earning $20,000 than if you’re earning $400,000. And according to a 2010 study, the top 0.5 percent in income account for more than $50 billion in unpaid taxes each year, after adjusting for inflation. In 2009, the IRS formed a team specifically tasked with taking on the super-wealthy. However, this effort was impeded after lobbyists successfully reigned in the new team’s power and its budget was slashed after Republicans took control of Congress in 2010. In the latest installment of their excellent series, “Gutting the IRS,” ProPublica’s Jesse Eisinger and Paul Kiel explain why it’s so hard to audit the ultrawealthy.
For starters, they can devote seemingly limitless resources to hiring the best legal and accounting talent. Such taxpayers tend not to steamroll tax laws; they employ complex, highly refined strategies that seek to stretch the tax code to their advantage. It can take years for IRS investigators just to understand a transaction and deem it to be a violation. Once that happens, the IRS team has to contend with battalions of high-priced lawyers and accountants that often outnumber and outgun even the agency’s elite SWAT team. “We are nowhere near a circumstance where the IRS could launch the types of audits we need to tackle sophisticated taxpayers in a complicated world,” said Steven Rosenthal, who used to represent wealthy taxpayers and is now a senior fellow at the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution.
Only in Louisiana
From an instrument to keep information about alligator breeding out of the public record, to a bill making “Jambalaya (On the Bayou)” the official Louisiana state song, several offbeat legislative measures have made their way onto this session’s docket. Nola.com/The Times Picayune’s Julia O’Donoghue breaks them down, including a few bills to clarify the meaning of “milk,” “meat,” and “crawfish”:
Louisiana is definitely its own place – and with that, it has its own set of strange legislative proposals. The stuff that makes the big headlines out of the state Capitol in Baton Rouge concerns taxes, state spending, criminal sentencing and more. But there’s also a lot of below-the-radar proposals too.
Number of the Day
$50 billion – The amount of money in taxes that go unpaid each year by the richest 0.5 percent, after adjusting for inflation. (Source: ProPublica)