“Tax reform” moves to voters

“Tax reform” moves to voters

This week, Governor John Bel Edwards signed tax legislation that could drastically harm the state budget in future years and that fails to change a system where the poorer you are, the more of your income you pay in state taxes. But Louisiana voters will have the final word when the tax package appears as a constitutional amendment on the October 9, 2021 ballot. The tax swap would trade a longstanding federal income-tax deduction for lower tax rates on people and corporations, with the biggest rate cuts going to those with the highest incomes. The package could also dramatically harm the state budget through mandatory income tax rate reductions if and when the economy does better than expected, leaving less money for education, health care and transportation. Wesley Muller of the Louisiana Illuminator has the details

If voters approve that amendment, it will prompt the tax-swap repeal of the deduction and usher in the reduced income tax rates and other so-called “tax reform” provisions included in the bills signed by Edwards on Monday. (…) The legislation would also enact tax-cut triggers that automatically reduce future tax rates if the state experiences economic growth at a certain threshold and if the state’s “rainy day” fund is at a certain balance. Such triggers go against the advice of the Louisiana Budget Project.

Inequities in unemployment benefits 
Because of social inequities such as discrimination in the hiring market, overincarceration and unequal access to generational wealth and high performing schools, Black people experience unemployment at nearly twice the rate of white people, even during times of economic stability and growth. This disparity held during the economic downturns of the Great Recession and Covid-19. But when Black workers apply for unemployment benefits, they are less likely than their white peers to receive them, according to a new study by the Government Accountability Office (GAO). GAO’s analysis of five state unemployment programs found that white applicants reported getting benefits 80% of the time, while Black applicants got them just 73% of the time. Meghan McCarty Carino reports for Marketplace:

It’s a pattern familiar to William Spriggs, an economist at Howard University. “This disparity is well known and has been documented. During the Great Recession, we had the same problem,” Spriggs said. It’s partly by design, Spriggs added – back when the unemployment system was established in the 1930s, it excluded a lot of workers from eligibility. “It did not conceive protecting workers who were part-time or workers who were in the service sector who got very low wages,” he said. The workers Spriggs is referencing were – and still are – disproportionately Black.

Federal pandemic unemployment benefits were designed to help compensate for some of these inequities, but even before states started pulling out of these vital benefits, people in Southern states often faced more complicated application and appeal processes, which disadvantaged Black workers. 

Lowest rates, highest hurdles
Southern states, including Louisiana and its neighbors to the east, continue to lag the rest of the country in vaccination rates, a circumstance that makes it harder for people to get back to something like the pre-Covid normal, especially for those hit the hardest by physical and financial health impacts. The barriers to higher vaccine rates are complex. Higher poverty rates and high ALICE (Asset Limited Income Constrained Employed) populations in Southern states mean people are simply struggling to get by, and vaccines, while important, easily get pushed to the back as more pressing issues take precedence. Aallyah Wright of Stateline explains:

(LaShonda) McKinney of Mississippi and Sarah Berthelot, the president of the Louisiana Association of United Ways, said that in their states, the vaccination barriers include internet illiteracy and fears of using public transportation. And for some people with low incomes, they said, food and housing insecurity simply take precedence over getting a vaccine. “Louisiana faced a series of hurricanes in the fall, and we’ve had two flooding events since the beginning of 2021. We had an ice event, and we had the flooding event two or three weeks ago,” Berthelot said. “The COVID pandemic overlaid with the natural disasters—people find themselves in situations that they’ve never been in before.”

Racial disparities in hardship continue
Before the pandemic, communities of color were significantly more likely to face financial hardship than white communities, with Black and Latinx people experiencing hardship at two and three times the rate of their white neighbors. Unfortunately, these disparities were made worse by the pandemic. As people in America work to rebuild their lives, a return to the inequities of the pre-pandemic status quo is not good enough. Additional recovery legislation in Congress can and should help close these longstanding gaps. Catlin Nchako of the Center on Budget and Policy Priorities has the latest on what the U.S. Census Household Pulse Survey data reveals: 

According to the latest Pulse data, collected May 26-June 7: Some 20 million people – about 10 percent of adults – reported their household was food-insufficient (meaning it sometimes or often didn’t have enough to eat) in the last seven days. An estimated 10.5 million adults – 14 percent of adult renters – reported not being caught up on rent. Some 63 million people – 27 percent of adults – reported difficulty covering usual household expenses in the last seven days, such as food, medical payments, student loans, or rent or mortgage.

Number of the Day
– Share of Louisiana adults reporting difficulty paying for usual expenses such as food, rent or mortgage, car payments, medical expenses, or student loans in the last seven days – about 991,000 Louisianans. (Source: U.S. Census Bureau, via the Center on Budget and Policy Priorities)