Racial injustice in Louisiana’s tax code

Racial injustice in Louisiana’s tax code

White households in Louisiana pay the lowest combined tax rate in the state, while Black households pay the highest. That’s according to a new policy chart book by LBP’s Stacey Roussel, using data from the Institute on Taxation and Economic Policy. Louisiana’s upside-down tax structure makes it more difficult for people and communities of color to build income and wealth over time.

Years of policy advantage and privilege have led to a significant overconcentration of white families among the state’s top earners. While white households make up 61% of Louisiana’s overall population, they comprise 79% of the state’s top earners (defined as the top 20% of earners). In contrast, about half of low-income families (49%) in Louisiana are white (defined as the bottom 20% of earners, or those earning less than $17,100). Historical and current racism have caused a disproportionate share of Black, American Indian, and Hispanic households to fall into this lower-income group relative to their share of the population.

Invest in infrastructure equity
President Joe Biden’s administration released details of its $2 trillion infrastructure plan today, including billions of dollars for repairs and upgrades to local water systems. The Washington’ Post’s Jeff Stein, Juliet Eilperin and Michael Laris explain the details.

The president will also ask Congress to provide $45 billion to replace the remaining lead pipes across the country, while reducing lead exposure in 400,000 schools and child-care facilities. Another $56 billion would go to grants and low-interest loans so state, local and tribal governments can upgrade aging water systems, while $10 billion would be spent on addressing polyfluoroalkyl and perfluoroalkyl (PFAS) chemicals that have contaminated drinking-water supplies across the country.

Louisiana’s ailing local water systems have long imperiled public health around the state. As the Brookings Institution’s Andre M. Perry, Joseph W. Kane and Carl Romer point out, while states and municipalities have not, in the past, prioritized poor communities and communities of color for upgrades to legacy infrastructure, a new round of infrastructure funding offers a new opportunity to right that wrong:

(J)ust as infrastructure can lead to long-lasting costs, it can also be a foundation for long-lasting benefits. … That requires public and private leaders at the state, regional, and city level—including water utilities—to talk about future and existing infrastructure needs in terms of the most vulnerable households, engage with a greater variety of residents, and test new projects and ideas. For instance, more coordinated “One Water” planning efforts can bridge policy and investment gaps among municipal leaders while involving community-based organizations, workforce development bodies, and other groups that have long been ignored. Better measuring water affordability needs and launching more robust customer assistance programs can make a difference too. And seeking more resilient solutions, including green infrastructure upgrades, can lead to lasting economic and environmental returns.

Bad deals for Louisiana’s kids
State and local tax abatements take money from schools, sheriffs and local governments, and give it to corporations as incentives for setting up shop in a particular area. In Louisiana, these incentives, administered through the Industrial Tax Exemption Program (ITEP), have sometimes come long after a business is well established and when there is no relocation left to incentivize. But the costs of these giveaways are significant. In a new report, Christine Wen, Katie Furtado, and Greg LeRoy from Good Jobs First put Louisiana’s ITEP in context:

ITEP is the nation’s most notorious property tax abatement program. Unlike in any other state, since the 1930s, control of local abatements in Louisiana has resided in one state board, appointed entirely by the governor. Local governments, including parish school boards, until recently had no power to opt out of ruinously costly ITEP awards. That remained true until a faith-based coalition, Together Louisiana, persuaded Gov. John Bel Edwards to issue an executive order in 2016 granting localities the right to opt in or out of each state-approved ITEP abatement. Since then, at the insistence of citizen activists, localities have opted out of some expensive deals. The most dramatic of these local disputes came in mid-2019, when teachers in East Baton Rouge voted 445 to 6 to walk out if the parish school board granted a $2.9 million abatement to ExxonMobil for a facility that was already built and operating. The school board backed down and opted out of the deal. Despite some defeats, manufacturing lobbyists are seeking to undo the executive order (including an unsuccessful 2020 ballot initiative) and property tax abatements remain contested terrain in the Pelican State.

Maryland brings equity to the committee room
When legislators make state laws, they may not have a precise sense of how bills they consider can have different effects for members of different racial groups. In Maryland, a pilot of “racial impact statements” for bills on criminal justice and policing may change that. Just as fiscal notes help legislators understand how bills affect state revenues, racial impact statements help clarify where a bill might disproportionately impact particular racial groups. The Baltimore Sun’s Pamela Wood has the story:

“There is finally a broader understanding across Maryland and the country of the existence of structural racism — but we have to have better and deeper information in order to reverse its impact,” House of Delegates Speaker Adrienne A. Jones said in a statement. The nonpartisan analysts at the state Department of Legislative Services will generate the “racial impact statements” on bills, using data and assistance from Bowie State University and the University of Baltimore’s Schaefer Center for Public Policy. The analysts already write comprehensive summaries for every bill introduced in the General Assembly, including explanations of how the proposals would work, how much they would cost and how they would affect local governments and small businesses.

Number of the Day
$6,035 – Amount of funding, per pupil, that the St. Charles Parish School District lost in 2019, due to corporate tax abatements. 58% of students in St. Charles Parish schools are classified by the Department of Education as economically disadvantaged. (Source: Good Jobs First)