The American South is one of the most racially diverse regions of the country and is famous for its food, hospitality and music. But Southern states also fare worse on most measures of well-being, such as poverty, health and education, partly because they raise less revenue per capita than other states. Inadequate revenue means less financial support for vital public services such as education and health care. A new report from the Institute on Taxation and Economic Policy examines the racist policies that led to the South’s regressive tax laws: 

Southern state tax systems are uniformly regressive. This means they assess a higher effective tax rate on low-income households than high-income households due to how states in this region design their tax policies. … Consumption taxes (i.e., sales and excise taxes) are the most regressive major tax category. These taxes tend to worsen income inequality along both racial and economic dimensions. They are based on spending, not income or ability to pay. Low-income households, a disproportionate share of whom are households of color, spend most or all of what they earn to make ends meet. 

Author Kamolika Das writes that states can make their tax systems more equitable by relying more on graduated income taxes with higher brackets: 

Adopting a graduated income tax is the most impactful and fair strategy for creating a progressive state tax system since graduated income taxes are explicitly based on one’s ability-to-pay. Due to centuries of systemic racism in labor markets, housing markets, and education systems, white families are disproportionately concentrated among the nation’s highest earners. Taxing top incomes would raise substantial revenues to fund key priorities and would also help lessen the growing racial wealth divide. 

The good news for Louisiana is that state lawmakers this year refused to follow along with states like Mississippi, which used temporary federal revenues as an excuse to pass permanent tax cuts for the wealthy. But Louisiana’s tax structure remains deeply regressive, and balancing the budget could get much more difficult in the years ahead as the economy slows down and a temporary sales tax expires. Legislators will have a chance to address these issues during the next fiscal session that starts April 10. 

Community and technical colleges are still a bargain 
When recent graduates of Louisiana’s community and technical colleges received their diplomas in May, inflation had risen by 8.6% from the previous year. Luckily for these former – and current students – tuition and fees for two-year programs in the state have remained flat for seven years. An Advocate editorial explains the benefits of keeping tuition low: 

Quinton Taylor, LCTCS spokesman, said, “If we keep tuition flat, there are more opportunities for people to access the training we have. If you grow enrollment, you serve more students at the same rate and bottom line, you serve students by keeping your price flat and the cost affordable for students.”Alas, growing enrollment has been tough in recent years, as COVID has wreaked havoc with students’ lives.  But this year, as they have in six years before it, they caught another tuition and fees break. Good for them, and good for their job prospects in the future.  

Cuts to unemployment aid do not help workers 
State cuts to unemployment insurance result in more poverty, greater economic disparity across racial lines, and a reduced capacity to mitigate economic downturns, according to a new report from the Center on Budget and Policy Priorities. The organization surveyed the state of Unemployment Insurance (UI) systems across the country and found that the number of states providing fewer than 26 weeks of unemployment – the national standard until 2009 – is growing. Report author Nick Gwyn explains how proposed cuts fail to account for basic facts about the UI system: 

Some ignore individual workers’ needs, local differences, and barriers to employment. They mistakenly point to worker benefits as the cause of the system’s solvency problems and play into a narrative that workers who have lost jobs don’t want to find their next job expeditiously. They won’t help unemployed workers find jobs or protect their households against financial ruin during temporary periods of unemployment. Finally, they will weaken the ability of the UI system to respond to future recessions.

Workers return to broken child care system
High-quality, affordable child care has long been in short supply in the United States, and the crisis grew worse during the pandemic as child care centers struggled to stay open. While temporary federal aid provided a critical lifeline for the industry, that money will run out and sustained investment in this critical area remains uncertain as another economic package remains stalled in Congress. The Washington Post’s Casey Parks explains the struggles and anxiety of child care workers like the BriTanya Bays of  Stamford Texas. 

Already, though, Bays felt less than optimistic. Yes, the federal government had spent an unprecedented amount of money, but lawmakers had left it up to state leaders to decide how to spend those billions. Some states had doubled the rates they pay providers. They’d offered bonuses to child-care workers, and they’d doled out grants to business owners who wanted to expand. Texas still hadn’t given out the bulk of its share. The relief dollars would arrive later that spring, Bays knew, but that money was temporary, not a solution for the underlying problems of an industry everyone seemed to agree was broken. When the federal money dried up, child care would still be too expensive for most parents, and workers like Bays would remain among the nation’s poorest.

Number of the Day
53.3% – Percentage of tax revenue that Louisiana generates from sales and excise taxes. Sales taxes are the most regressive of the major tax categories (sales and excise, income and property) because they eat up a disproportionate share of household income for low-income people, who must spend more of their take-home pay on immediate needs than their wealthier neighbors. (Source: Institute on Taxation and Economic Policy)