Tax breaks for jobs scheme isn’t working

Tax breaks for jobs scheme isn’t working

Louisiana has a long history of giving away lucrative tax breaks to corporations that promise to create new jobs. But what happens when those jobs don’t materialize – or if the company receiving the tax break ends up cutting its workforce? Chris Staudinger reports for the Illuminator that Marathon Petroleum reaped a bushel of state tax breaks – along with $2.1 billion in federal pandemic relief – as it eliminated nearly 2,000 jobs at its Garyville refinery. 

The Garyville refinery – located along the Mississippi River in St. John the Baptist Parish – is the third largest in the country. It can process 578,000 barrels of oil a day into gasoline, asphalt, propane and other substances. It has been a longtime beneficiary of ITEP, and a recent ITEP application stirred controversy in a parish known for heavy industry and a high rate of air pollution. By the time Marathon made its fall layoffs, it had already quietly announced that it would claim a $1.1 billion tax refund, thanks to Cares Act provisions which gave companies tax benefits based on net operating losses.

 The Illuminator’s Jarvis DeBerry notes that legislators are far less generous when it comes to tax credits for working families.  

On the last day of the legislative session, Rep. Royce Duplessis (D-New Orleans) asked the Louisiana House to extend the current 5% federal earned income tax credit by five years, calling it “good policy that … serves working people at the bottom of the totem pole.” Rep. Blake Miguez (R-Erath), the leader of the Republican Caucus, objected to the projected cost of $20.5 million a year. “This institution,” Rep. Barry Ivey (R-Central) said in defense of Duplessis’ bill, “gives everything away for corporate, for business. We give it away. We don’t even think about it. … But when it comes to the people of our state, we’re going to have these unbelievable philosophical questions and concerns about whether it’s the right thing to do.” 

As the Advocate’s Sam Karlin explains, the state’s tax exemptions don’t only shortchange the people of our state, but also emerging industries such as solar power that lack powerful allies in the Capitol. 

In recent months, several parishes have issued moratoriums on utility-scale solar projects. And some legislative leaders took aim at solar developments in the recently ended legislative session, asking the Louisiana Economic Development agency to halt property tax breaks for such projects. … (Sen. Beth Mizell) … suggested that solar was a natural enemy of a more important industry in Louisiana. “I thought we were an oil and gas state the whole time I’ve been here. Solar is over here, and if we’re choosing solar over oil and gas, nobody’s told me,” Mizell said. 

Broadband for rural areas 
As schools and many office jobs went remote during the pandemic, Louisiana’s rural communities suffered from major gaps in broadband internet access. Now the state is issuing $180 million in grants for rural internet infrastructure construction, in a bid to close the digital divide between the state’s rural and urban areas. The Advocate’s Blake Paterson explains why these investments are critical for the future of these communities.

Paul Coreil, chancellor at LSU of Alexandria, said that for rural communities already facing population loss, access to high-speed internet is a life or death necessity. During the pandemic, his university received a waiver to keep its computer labs open because so many of its students in rural Rapides Parish didn’t have access to internet. He said if rural communities want to attract those students once they graduate, they’ll need to beef up their broadband. “If we had proper, faster internet, we could keep our young people from wanting to move away,” Ville Platte’s Mayor Jennifer Vidrine agreed. 

Where economics failed us
Low-wage workers aren’t low-skilled workers. Unfortunately, that’s how many economists view them. William E. Spriggs, professor at Howard University and chief economist for the AFL-CIO, argues in Williams Magazine that this pattern of thought, which devalues the skills that low-wage workers deploy every day, leads many to justify poverty wages for hard working people. 

Modern economics was founded in the late 19th and early 20th centuries by people who believed in eugenics and viewed the races of service workers as inferior. These foundational beliefs still infect the discipline. Perhaps this helps to explain why, despite recent research showing that raising the minimum wage would be good, so many economists insist that it would be counterproductive. Economists equate value with money: Cheap things have little value and thus cannot be essential. 

State’s most powerful lawmakers get majority of pet projects 
Louisiana legislators loaded up next year’s budget with pet projects for their districts – about 300 projects worth a combined $85 million. A majority of the money went to parishes represented by the most powerful members of the Legislature. Julie O’Donoghue of the Illuminator has the story

About $48 million — 56 percent of all lawmaker pet project funding — went to 12 parishes represented by six powerful lawmakers who oversee the state’s finances, according to an analysis done by Louisiana Illuminator. When divided up, the $85 million in pet project funding amounts to $18.30 per Louisiana resident statewide. But the state budget plan steered more of that money — $28.67 per resident — to parishes represented by Senate President Page Cortez, R-Lafayette, House Speaker Clay Schexnayder, R-French Settlement, Senate President Pro Tempore Beth Mizell, R-Franklinton, House Speaker Pro Tempore Tanner Magee, R-Houma,  Senate Finance Committee Chair Bodi White, R-Central, and House Appropriations Committee Chairman Jerome Zeringue, R-Houma. 

Number of the Day 
60,000 – Number of employees fired by 77 oil and gas companies after those companies received billions of dollars in CARES Act tax refunds. (Source: BailOut Watch via the Louisiana Illuminator