The Louisiana State Senate Committee on Revenue & Fiscal Affairs has taken its first step toward a kind of tax reform, reports Tyler Bridges of The Advocate, passing Senate Bill 159 favorably onto the floor. This bill is part of a package that would eliminate the state’s unusual federal income tax deduction while also reducing the top income tax rate from 6% to 5%. Essentially, in exchange for eliminating a tax deduction that mainly benefits the wealthy, some legislators hope to cut taxes for the wealthy, to ensure revenue neutrality. As David Jacobs of The Center Square noted, LBP executive director Jan Moller was at the legislature to express his concerns:
While no one opposed eliminating the federal income tax break, the tax rate change was more controversial. Jan Moller with the Louisiana Budget Project, which focuses on how state policy affects low- and middle-income residents, argued the state needs to raise revenue, pointing to teacher salaries that are well below the regional average as one example where more spending is needed. Moller also said the state’s high sales tax rate, which force lower-income residents to spend a larger proportion of their money on state taxes than those with higher incomes, makes Louisiana more of an outlier than the income tax rates.
In our latest episode of the Didja Know? podcast, Moller and director of public affairs and outreach Davante Lewis join the show to talk about the tax reform debate dominating the first week of the legislative session, and why lawmakers should use revenue from the repeal of the federal income tax deduction to invest in people as opposed to simply substituting one tax break for the rich for another tax break for the rich.
Centralizing sales taxes moves forward
The top priority for Louisiana’s business lobbyists this session is to centralize the collection of state and local sales taxes in a single agency. Currently, local sales taxes are assessed and collected by 54 different agencies, including parish and local governments, sheriffs, police juries and school boards across the state. This can make it very complicated for businesses in Louisiana to understand how to pay their owed sales taxes. Wesley Muller of the Louisiana Illuminator wrote about House Bill 199:
[HB199], sponsored by House Speaker Clay Schexnayder, R-Gonzales, would create the State and Local Streamlined Sales and Use Tax Commission to handle all sales tax administration and collections. Cities, parishes and other tax authorities would retain their powers to set and levy taxes but no longer collect them.
The AP’s Melinda Deslatte notes that similar efforts have failed in recent years amid opposition from local officials.
The legislation has high hurdles for passage, requiring two-thirds support from the House and Senate and backing from voters in a statewide election. And if the constitutional amendment is approved, lawmakers still would have to work out details before the centralization work begins.
Should the effort be successful, Louisiana would still be too reliant on sales taxes to fund state and local government. These taxes are regressive and fall disproportionately on Black Louisianans.
A pause on Johnson & Johnson
Louisiana public health officials, along with health officials across the country, paused distribution of the one-shot Johnson & Johnson Covid-19 vaccine Tuesday following reports of several women experiencing severe blood clots shortly after receiving the vaccine. According to reporting by Philip Kiefer of The Lens, FDA officials expect the pause to only last a few days as the complications are examined, but public health officials are concerned that the stop in distribution could lead to greater vaccine hesitancy:
“Everybody that was rushing out to get it as soon as it was available has largely gotten their vaccine,” [Dr. Jennifer] Avegno[, City of New Orleans] health director told the [New Orleans] City Council. “Now we’ve got about 30 percent of our population that needs more time, needs more education, needs us to come to them.” Currently, just over 40 percent of the city has received a first dose. Avegno has said before that the city is aiming for 70 to 75 percent vaccinated to reach herd immunity.
Anti-Trans bills come with many costs
Legislators will be considering four measures that would restrict trans Louisianans’ rights and their ability to access health care. The bills especially target young trans people. As Julie O’Donoghue of the Louisiana Illuminator writes, this could cause an economic backlash as college and professional sport associations, and other corporations, have come out against such policies:
Leaders in Louisiana’s tourism industry — particularly those centered on New Orleans — said the restrictions on transgender people currently under consideration in the state Legislature may drive away major sporting events like the NCAA’s Final Four and the large business conventions that sustain the New Orleans economy… “We could lose everything,” said J.P. Morrell, who sits on the Louisiana Stadium and Exposition District board, which oversees the Louisiana Superdome and Smoothie King Center. “We just can’t afford to knock out one of the legs that is propping up our economy.”
The Louisiana Budget Project is accepting applications for paid, part-time internships in its Baton Rouge office for Summer 2021. Click here to learn more and apply!
Number of the Day:
36 million – The number of Americans who would have their student loan debt completely wiped out if the federal government chose to forgive up to $50,000 per borrower, according to new federal data that was released on Tuesday by Sen. Elizabeth Warren. (Source: Politico)