Voters reject tax breaks and budget restrictions

Voters reject tax breaks and budget restrictions

Last spring, as the Covid-19 restrictions kept most Louisianans away from their state Capitol, corporate lobbyists and conservative activists rushed a pair of constitutional amendments through the Legislature and onto the Nov. 3 ballot: Amendment 4 proposed a restrictive new cap on what the state could spend each year on education, health care and other public services; Amendment 5 would have granted manufacturing corporations the ability to lower their tax bills through sweetheart deals with local governments. On Tuesday, the voters rejected both amendments by decisive margins, with No. 5 losing in a landslide. Will Sentell and Mark Ballard report for The Times-Picayune | Baton Rouge Advocate: 

Millions of dollars were spent on both sides for Amendment 5, which concerns a break on local property taxes the state offers manufacturers that locate in Louisiana or expand their hiring. The idea is to give local governments more flexibility in hammering out financial deals with manufacturers. … Parish tax assessors criticized the proposal as did the community group Together Louisiana. Opponents said the new rules would cripple long-term planning by local governments and allow corporations to duck taxes, hurting public services or forcing taxpayers to pay more.

Amendment 4 received less attention, but would also have hurt Louisiana’s long-term ability to fund higher education, Medicaid and other services that are financed with state general fund dollars. As LBP wrote in early October

This amendment is a dangerous, blunt instrument that purports to solve a problem that doesn’t actually exist. By restricting the legislature’s flexibility to make budget decisions, it would almost certainly lead to unnecessary cuts to higher education, healthcare, public safety and other services that rely on general appropriations. It also would make it far more difficult for lawmakers to respond to economic emergencies such as the Covid-19 recession.  

 

Raising taxes on the poor
While it’s still not clear who will be president come Jan. 21, this much appears certain: Unless something is done, taxes are about to go up on American families that can least afford it. That’s because, as economist Joseph Stiglitz explains in The New York Times, the 2017 tax cut law signed by President Trump includes built-in, automatic tax increases starting in 2021 that will affect all but the highest earners. 

All taxpayer income groups with incomes of $75,000 and under — that’s about 65 percent of taxpayers — will face a higher tax rate in 2027 than in 2019. … The current poverty line for a family of four is $26,200: People with incomes between $10,000 and $30,000 — nearly one-quarter of Americans — are among those scheduled to pay a higher average tax rate in 2021 than in years before the tax “cut” was passed. The C.B.O. and Joint Committee estimated that those with an income of $20,000 to $30,000 would owe an extra $365 next year — these are people who are struggling just to pay rent and put food on the table.

 

Federal dollars, with no strings attached
The federal government pumped hundreds of billions of dollars into America’s health care industries as part of the Covid-19 relief bills. A Los Angeles Times analysis found that the money came with almost no strings attached, and in many cases helped fatten the profit margins for pharmaceutical companies, hospitals, medical device makers and others that are free to raise prices on consumers in the years ahead. The great Noam M. Levey reports

The government largesse for an industry that already costs Americans more than any healthcare system in the world contrasts sharply with the federal government’s strategy for rescuing automakers, banks and other financial institutions during the Great Recession a decade ago. During that crisis, recipients of taxpayer bailouts were subject to restrictions and requirements that public aid be recouped, which largely occurred. The Trump administration’s lenient rules for corporate recipients of COVID-19 aid also contrast with its approach to government programs for poor people, such as Medicaid or food stamps. Administration officials have repeatedly said these funds should be available only to low-income Americans who meet strict conditions, such as seeking work.

 

Herd immunity and the House GOP
The effort by Louisiana House Republicans to undermine Gov. John Bel Edwards’ authority to respond to Covid-19 reminds historian and author John M. Barry of “lemmings following each other off a cliff.” As the battle heads to the court, Barry reminds readers of The Times-Picayune | Baton Rouge Advocate that the GOP’s efforts to lift economic restrictions will not have their intended effect. 

The truth is that economic recovery depends on whether the public believes that going out is safe. Both history and recent studies make that point. Lifting restrictions would lead Louisiana down the path of herd immunity, kill an unacceptable number of their constituents, yet do nothing to restore the economy.

 

Number of the Day
70% – Increased risk of death for pregnant women who are infected with Covid-19, compared to women in the same age group who are infected but not pregnant. (Source: Centers for Disease Control and Prevention via New York Times)