Taxing the rich to Build Back Better

Taxing the rich to Build Back Better

Democrats on Capitol Hill have been working for weeks to craft a sweeping budget bill that would strengthen the country’s safety net, combat climate change and address historic income inequality. On Monday, they presented a plan to pay for it. The plan includes significant tax increases on the rich and certain corporations that would, as the Washington Post’s Jeff Stein explains, start to level the playing field between America’s super rich and middle class. 

“This is a critical time. The magnitude of the inequality in America today is much larger than it’s been in years. We are in an era not seen since the Gilded Age at the end of the 19th century, or the Roaring ’20s right before the Great Depression,” said Joseph Stiglitz, a Nobel Prize-winning economist at Columbia University. “The question is: Will our political system be dictated by the vast majority of Americans or a small minority of vested interests who want to keep their goodies for themselves?”

Chuck Marr and Samantha Jacoby of the Center on Budget and Policy Priorities explain that while the investments and revenue raisers are historic and would promote racial equity, additional steps are available. 

While the package is robust, it does omit some key proposals that the President, Senate Democrats, or other policymakers have called for that would strengthen the package and raise additional revenues. In particular, the package should include President Biden’s proposal to require financial institutions to provide certain information that will help the IRS identify households that are underreporting their income and cheating on their taxes. This will both raise revenues and make our tax system fairer. The package could also do more to ensure that high-income people can’t shield their income from taxation as well as reduce incentives for multinational corporations to shift profits to overseas tax havens.

Louisiana makes it more expensive to go solar
Hurricane Ida shone an unwelcome spotlight on the shortcomings of Louisiana’s fragile electric power grid. One way for households to be more resilient in future storms is by expanding the capture and storage of solar energy through rooftop panels and batteries. Unfortunately, as The Advocate’s Halle Parker explains, the Louisiana Legislature has made this option more expensive for homeowners, by prioritizing the wishes of big utility corporations over the economic reality that many families face across the state.  

In 2015, the Legislature scrapped its generous solar tax credit program, which covered as much as 50% of the first $25,000 spent on a rooftop system. The state credit, combined with the federal government’s 30% tax credit, had encouraged many homeowners to go solar. The out-of-pocket cost for a 5-kilowatt system averaged $12,538 to $16,962 in Louisiana in 2019, according to EnergySage, an online solar marketplace. Then two years ago, the state Public Service Commission cut its “net metering standard,” lowering how much utility companies had to pay residents with rooftop solar for the power they produced for the grid. (Net metering remains alive in New Orleans, where Entergy is governed by the City Council.) 

Rental assistance remains stalled
Renters in Louisiana received some relief last week when Gov. John Bel Edwards signed an emergency order postponing all legal deadlines until Sept. 24, including blocking residential evictions. But billions of dollars in rental aid that would provide much-needed help to both renters and landlords remains stalled. Laura Olson of States Newsroom reports that this problem isn’t confined to just the Bayou State. 

Of the $46.5 billion approved by Congress to help renters who fell behind on payments amid the pandemic, only $5.1 billion had been distributed by the end of July, according to Treasury data. … “Slow-spending [rental assistance] programs tend to do little outreach. They don’t have enough staff to process applications. They have long and complicated applications with overly burdensome documentation requirements,” Yentel said. She added that if simplified application practices remain optional, “many programs will not adopt them.”

School boundaries linked to redlining 
In many cities across the country, school boundaries are still linked to a racist past, according to a new report from the Urban Institute. That’s because the boundary maps reflect a racist housing policy known as redlining, which was designed to keep Black Americans out of certain neighborhoods. Axios’ Russell Contreras explains the enduring consequences of basing education boundaries on racist maps. 

“It’s unequal, and not just in terms of race. The schools are different. The quality of instruction is different. Kids get expulsions and suspensions more on one side. There are more cops on one side than the other,” said Tomás Monarrez, one of the authors of the report. … “When these laws were passed, the government in this country knew exactly what it wanted. It wanted to segregate people based on race and location. And it wanted to make sure that schools reflected that,” Derrell Bradford, president of the education advocacy group 50CAN, told Axios after reviewing the report.

Number of the Day
$35 – Estimated average monthly increase that Louisianans who receive the Earned Income Tax Credit would get if current enhancements to the credit were made permanent under the American Rescue Plan Act. (Source: Institute on Taxation and Economic Policy)