Thinking clearly about Louisiana tax policy

Thinking clearly about Louisiana tax policy

The Louisiana Legislature won’t convene for its regular session until April, when tax policy and Covid-19 recovery will top the agenda. But debates are already underway about the best way to restructure Louisiana’s revenue system. With the pandemic and the economic crisis hitting communities of color particularly hard, equitable tax reform is critically important. Without it, Louisiana won’t be able to make the investments needed in people and communities that are suffering. In a new blog, LBP’s Jackson Voss looks at some of the myths about tax policy – and the realities we face in Louisiana:

Any reforms made to Louisiana’s tax structure should move us toward a more fair, adequate, competitive, transparent and sustainable revenue system – one that allows for much-needed investments in education, public safety and the social safety net and gives every Louisianan the opportunity to thrive. But tax “reform” means different things to different people. And in the coming weeks we are likely to see misinformation about the state’s tax system, and ideas for “fixing” it that would actually take us in the wrong direction. 

Biden’s $1.9 trillion stimulus 
Incoming President Joe Biden laid out a comprehensive $1.9 trillion stimulus plan on Thursday, aimed at helping Americans recover from the ongoing pandemic. The package includes $1,400 checks for most Americans, an expansion of unemployment benefits, an increase in the federal minimum wage to $15 per hour, additional nutrition assistance and federal aid to states and cities to help them offset budget shortfalls caused by the economic slowdown. The New York Times’ Jim Tankersley and Michael Crowley report that the ambitious plan faces uncertain prospects in a closely divided Congress: 

The Labor Department reported on Thursday that 1.15 million Americans filed new unemployment claims in the first full week of the new year, a 25 percent increase from the previous week. Another 284,000 claims were filed for Pandemic Unemployment Assistance, an emergency federal program for workers like freelancers who do not normally qualify for jobless benefits. The nation shed 140,000 jobs in December, the department reported last week. Mr. Biden’s aides say the urgency of the moment drove the president-elect to propose a significantly larger economic jolt than what the Obama administration pushed through upon taking office amid a recession in 2009.

The Times’ Jeanna Smialek breaks down what’s actually in the plan, including an expansion of paid family leave:  

Mr. Biden would renew paid leave provisions that were not extended as part of the December package, while eliminating exemptions for big and small employers. The plan would allow for 14 weeks of paid sick and family and medical leave for caregivers dealing with closed schools or care centers, while providing for a $1,400 leave benefit for eligible workers.

The white supremacy of austerity politics
“Austerity politics” – the idea that government should always be small, spending on services for low-income people curtailed and taxes (particularly on the wealthy) reduced – is likely to make a comeback in American politics now that control of the federal government has shifted in favor of progressives. But Vanessa Williamson of Brookings, writing in Dissent, explains that the austerity argument is rooted in the post Civil War push by wealthy, white Southerners to reclaim power during Reconstruction:

Taxes offered a different electoral entry point for the aristocracy of the Old South. Reconstruction governments desperately needed revenue for infrastructure and schools, and the resulting tax increases hit small farmers hard. By focusing on their identity as “taxpayers,” planters could elide the vast economic gulf between themselves and subsistence farmers in Appalachia. 

The best part of waking up
The New Orleans City Council voted unanimously on Thursday to reject four property tax breaks sought by Folgers Coffee Company worth a combined $14 million over the next decade. The council took advantage of flexibility by Gov. John Bel Edwards that allows local governments to set their own rules for when to grant tax forgiveness to manufacturers under the Industrial Tax Exemption Program (ITEP). The Illuminator’s Wesley Muller reports

None of the six applications met the city’s criteria, which requires the creation of 15 jobs per application with each job paying a minimum hourly wage of $18. Also, some of the applications were for facilities that Folgers had already built — prompting Councilmember Helena Moreno to call the proposed exemptions a “gift” rather than an economic incentive. In total, the six applications are worth an estimated $25 million in property tax revenue over 10 years for City Hall, the Orleans Parish School Board, and the Orleans Parish Sheriff’s Office. Each of those entities is allowed to vote on the applications for its share of the revenue, thanks to new rules enacted in 2016 by Gov. John Bel Edwards.

Number of the Day
$1.07 billion – The amount of outstanding criminal justice debt in Louisiana for fiscal year 2019. This was a 95% increase since fiscal year 2009. (Source: Hope Policy Institute )