Tax swap is not reform

Tax swap is not reform

Louisiana’s tax structure fails its citizens in two fundamental ways: First, it does not raise enough revenue to support people and communities by adequately funding good schools, reliable infrastructure and a strong safety net. Second, it is regressive – meaning low-income households pay taxes at higher rates than those at the very top. A constitutional amendment on the Nov. 13 statewide ballot would not fix these two basic problems. It also would make it harder to raise the revenue that’s needed to ensure that teachers are paid adequately, all citizens have access to quality health care and families have the support they need to thrive. LBP breaks down Amendment 2 in a new policy brief

In effect, Amendment 2 trades a tax loophole that helps the rich for tax cuts that help the rich, while making it harder for Louisiana to pay for the schools, roads, health care, and safety net programs that benefit all of us. Should the amendment become law, it could also lead to across-the-board tax cuts in future years if Louisiana’s economy reaches certain growth targets. This means tax cuts would take priority over other potential needs in the state budget. With failing infrastructure, poor educational outcomes, and 1 in 4 of our state’s children living in poverty, Louisiana has many pressing needs. Amendment 2 would make it harder for the state to address them.

Rising unemployment after Ida
Louisiana’s workers – already deeply disadvantaged by job losses, low pay and an early end to enhanced federal unemployment benefits – now face a hard recovery from storm-related unemployment. Federal unemployment aid expired last week for more than 7 million Americans, but Louisiana workers lost the extra $300 per week earlier this summer when Gov. John Bel Edwards signed a bill backed by business lobbyists to cut off the aid a month early. Now, in the wake of Hurricane Ida, Louisiana has seen a sharp uptick in unemployment insurance applications. The Associated Press has the numbers:  

Unemployment aid applications jumped to 4,000 in Louisiana, evidence that Hurricane Ida led to widespread job losses. Ida will likely nick the economy’s growth in the current July-September quarter, though repairs and rebuilding efforts are expected to make up for some of that in the coming months. Still, Ida shut down oil refineries in Louisiana and Mississippi about two weeks ago and left more than 1 million homes and businesses without electricity. 

U.S. Rep. Troy Carter is urging Edwards to retroactively reinstate the $300 per week enhanced benefit, which could result in $1,500 checks for as many as 150,000 Louisiana residents. As The Advocate’s Blake Paterson reports, Edwards considers the matter closed: 

When asked on his monthly call-in show Wednesday about reinstating the federal benefits, Edwards launched into an explanation of the legislative compromise and encouraged survivors of the storm to instead sign up for disaster unemployment. 

Economists call for permanent Child Tax Credit expansion
The American Rescue Plan temporarily expanded the federal Child Tax Credit through the remainder of 2021. Census data shows that the benefit boost has helped families by allowing parents to pay bills and buy groceries, school supplies and clothes for their children. In an open letter this week, 448 economists called to permanently expand the credit. CNBC’s Alicia Adamczyk spoke with one of the organizers:

Research has shown that reducing child poverty has lasting positive effects for low-income kids: they are healthier, do better in school and are more likely to be employed and earn more as adults. These are key reasons so many economists support making the enhanced CTC permanent, says Jacob Goldin, an assistant professor at Stanford Law School who specializes in tax policy and helped organize the letter. “It’s very rare to find an issue where so many economists agree on everything,” Goldin says. “But there’s just very, very strong evidence that providing extra financial assistance to kids growing up in low-income households yields big benefits in their lives.”

Race — not occupation — predicts recovery from the Great Recession
The coronavirus pandemic and its deleterious economic impacts disproportionately impacted Black, Latinx and Indigenous people in the United States, across industries and social classes. Before the pandemic — and the Great Recession — people of color faced greater likelihood of financial precarity. New research by Duke University shows that Black families fared worse after the Great Recession than white families regardless of class status or profession.

“As the economy recovered, the typical Black household remained financially fragile and entered the COVID-19 crisis with less of a private safety net,” says co-author Fenaba Addo, an associate professor of public policy at University of North Carolina-Chapel Hill and faculty affiliate of the Cook Center. “By comparison, white working-class households had overwhelmingly middle-class levels of wealth — and were better positioned for the economic uncertainty the pandemic brought.”

Number of the Day
$144.3 billion Total annual income lost across the United States due to the expiration of enhanced federal unemployment benefits. Consumer spending is projected to drop $79.2 billion as a result of the benefit cuts. (Source: Economic Policy Institute)