Louisiana’s dangerous tax cut trigger

Louisiana’s dangerous tax cut trigger

A state’s ability to provide critical services relies on stable, predictable revenue. But some states, including Louisiana, have passed laws that call for automatic tax cuts to take effect if state revenues reach certain levels. As The Center on Budget and Policy Priorities’ Wesley Tharpe explains in a new blog, such tax cut triggers are terrible policy that can force states to cut important services at the worst possible time. 

While proponents often position phase-ins and triggers as the responsible alternative to immediate cuts, they simply make the harm someone else’s problem. States’ standard budget window is one to two years. By pushing the implementation of tax cuts outside that window, lawmakers behind these plans can partially mask the full toll they’ll eventually enact. … But we know from experience that the bill will eventually come due, often when states can least afford it, such as after a recession or some other economic shock. 

The tax-swap package that Louisiana voters narrowly approved in 2021 provides a test case. Louisiana’s automatic tax cuts would come when the prospects of a future recession are increasing and as the state faces a massive fiscal cliff in 2025. Sen. Bret Allain, the architect of the 2021 package, has introduced a bill for the upcoming legislative session designed to limit the potential revenue losses from the trigger. 


No plan for Social Security
President Joe Biden unveiled his 2024 budget on Thursday, calling for raising taxes on the wealthiest Americans and increased spending on education and social programs for children and families. While the proposal also includes a plan for keeping Medicare solvent, there was no mention of Social Security. Biden ran for president on shoring up Social Security’s finances and expanding benefits to the lowest-earning retirees – a move that would immediately lift 360,000 older adults out of poverty. The New York Times’ Jim Tankersley reports on the notable omission from Biden’s budget. 

Yet just like Mr. Biden’s previous budgets, his latest proposal made no mention of any tax or spending increases linked to Social Security, which is set to exhaust its trust fund in just over a decade. At that point, the government will need to borrow additional money or reduce benefits for retirees. Mr. Biden’s 2020 campaign plan appears to be a casualty of messaging and policy considerations, including an unwillingness by administration officials to muddle what they see as a winning argument that casts the president as the protector of a cherished program and congressional Republicans as its foil. That position is based in part on history: Presidents and candidates for the White House have struggled for decades to sell voters and lawmakers on plans to change the program.


Why poverty persists in America 
A graph of the share of Americans living in poverty over the past 50 years resembles gently rolling hills, steadily rising in recessions and falling in economic booms. The nation’s stalled progress on poverty is puzzling, considering America’s increased spending on anti-poverty programs during that time. But there’s a confluence of factors, including stagnant wages, rising costs and an erosion of union protections that prevent too many Americans from making ends meet. Matthew Desmond, a Pulitzer-Prize winning sociologist, offers a new explanation for an intractable problem in a guest column for the New York Times:

Today multiple forms of exploitation have turned antipoverty programs into something like dialysis, a treatment designed to make poverty less lethal, not to make it disappear. This means we don’t just need deeper antipoverty investments. We need different ones, policies that refuse to partner with poverty, policies that threaten its very survival. We need to ensure that aid directed at poor people stays in their pockets, instead of being captured by companies whose low wages are subsidized by government benefits, or by landlords who raise the rents as their tenants’ wages rise, or by banks and payday-loan outlets who issue exorbitant fines and fees.. 


A preview of impending hunger crisis
Danny Blair and his wife start driving at 4 a.m. twice a week to ensure they get a spot in a food line. One Friday, the Kentucky couple waited nearly nine hours before they were loaded up with food. The harrowing experiences of Blair and others in his impoverished community stem from decisions by Bluegrass state lawmakers to end the state’s public health emergency last year, which resulted in a cut in food stamp benefits. The Washington Post’s Tim Craig explains how Kentucky could preview America’s coming hunger crisis as federal pandemic-era food benefits expire. 

From the front to the back of the line, the sea of despair and hardship along this desolate Kentucky highway foreshadowed what may be in store for millions of Americans as the federal government ended the remaining pandemic increase in monthly food stamp benefits this week…. For those waiting in line for food in Kentucky, the last year has been jarring. Some said they can now only afford to eat once a day. Others limit expensive items like meat for specific family members like growing teenage boys. All described feeling hunger.


Number of the Day
311,000 – Number of jobs the American economy added in February. The gain surpassed economists predictions of a more modest month. (Source: U.S. Bureau of Labor Statistics