Cutting income taxes is dangerous and shortsighted

Cutting income taxes is dangerous and shortsighted

Louisiana legislators aren’t the only ones bent on eliminating their state income tax – a spectacularly bad idea that would mean devastating cuts to public education, health care and other important investments. As Michael Leachman of the Center on Budget and Policy Priorities explains, Mississippi Gov. Tate Reeves is floating the same bad idea in the name of economic recovery. We have already seen how this story ends: states that significantly cut income taxes do not see economic booms and instead struggle to provide basic services to support their constituents which threatens economic growth in the long term: 

States that sharply cut income taxes have reaped sharply lower state revenues, as common sense would predict, and they have consistently failed to produce an economic boom. And states without broad-based income taxes, including Florida and Tennessee, have higher sales and property taxes and economies that are nothing special. Nearly 80 percent of the country’s economic output last year came from states with income taxes. Mississippi would do better by investing in the people and businesses already in the state. That’s where the vast majority of jobs come from in every state anyway. Particularly during a pandemic that’s hit low-income people and people of color the hardest, states need antiracist, forward-looking policies that protect families facing the greatest challenges and address the longstanding racial and class inequities that weaken our shared future.


Unanimous juries may be retroactive
The U.S. Supreme Court ruled in April that a defendant can’t be convicted in a criminal trial without the unanimous vote of the jury. Prior to that ruling, Louisiana, Oregon and Puerto Rico allowed non-unanimous jury decisions to convict a criminal defendant, meaning that thousands of incarcerated people in these jurisdictions were found guilty through a process that is now unconstitutional. Now, the court is wrestling with whether their ruling should be retroactive. Jessica Gresko of the Associated Press has more

Several justices noted the very high bar past cases have set to making similar new rules retroactive while also suggesting this case might clear it. And the case did not seem to be one that would split the court along traditional liberal-conservative lines. …Louisiana, Oregon and Puerto Rico could be forced to retry hundreds or thousands of people if the court’s decision were to be made retroactive, Louisiana has said. And several justices pressed the lawyers before them on how many people might need to be retried, with one lawyer saying it could be 1,000 to 1,600 in Louisiana alone.


Fixing our roads with property taxes
Louisiana’s gas tax of 20 cents per gallon – the eighth lowest in the nation – hasn’t increased in 30 years. It’s the main reason Louisiana faces a $14 billion backlog of road and bridge projects – investments that would create jobs and promote long-term economic growth by making goods and services easier to move. Legislators plan to propose an increase to the gas tax in 2021, but proposals to raise the gas tax have failed to gain traction in recent years. Garey Forster, contributing columnist for The Advocate, thinks legislators should instead adopt a statewide property tax:

Roads and bridges are vital to the future economic growth and competitiveness of Louisiana. The revenue to maintain them must be dependable and stable with everyone contributing — homeowners, renters, and businesses. And there’s only one source which does that: property taxes. Article VII of the Louisiana Constitution, Section 19, allows for a statewide property tax of up to 5.75 mills of assessed value. This new tax could be levied by the Legislature and dedicated to roads and bridges with a portion guaranteed to be spent in the parish where it was generated, say 35%.


Extend UI benefits to create jobs
The $600 weekly federal boost to unemployment benefits and the creation of Pandemic Unemployment Assistance, which allowed independent contractors and gig workers to qualify for unemployment benefits, helped keep the economy afloat in the early months of the pandemic. Now an end to the pandemic is finally in sight with the development of new vaccines. But the economy will not go back to normal overnight, and it may take some time for some laid-off workers to find gainful employment. Elise Gould and Josh Bivens of the Economic Policy Institute argue that Congress should extend unemployment benefits from the CARES Act through 2021 to help with economic recovery, boost job growth and ensure every family has the resources and time they need to recover from the recession: 

If the effective safety net functions provided by these programs were maintained through 2021, millions of workers would be better able to avoid economic catastrophe while out of work due to the pandemic. Maintaining these programs’ effectiveness in providing relief and aid for recovery in the face of rising long-term unemployment rates over the next year requires adding additional weeks of UI eligibility duration. All told, we find that if these programs’ effectiveness is maintained through 2021, and if the virus is brought under control so that economic growth for 2021 returns to being simply a function of aggregate demand growth, the economy would be boosted by 3.5% and 5.1 million more jobs would be added in 2021.

Their calculations predict that an extension to these unemployment programs would support an additional 69,000 jobs in Louisiana in 2021. 


Number of the Day
42% – The percentage of adults in American households with children who struggled to cover basic household expenses this November. (Source: Center on Budget and Policy Priorities)