When voters in Massachusetts and Washington decided to raise income-tax rates on their wealthiest residents, the result was more money for state coffers – and no exodus of high-income earners. In fact, the number of millionaires – and their wealth- increased in both states. That’s the conclusion of a new report from the Institute for Policy Studies and the State Revenue Alliance:
“As our analysis shows, taxing high-income individuals at a higher rate is not disruptive and did not cause a mass exodus of millionaires from their respective states. In fact, those individuals were able to continue to grow their wealth, while also expanding state coffers so they can fund educational programs and improve transportation infrastructure. The revenue from these taxes can also be used to expand affordable housing and other vital services that enable working families in the United States to thrive.” [said lead report author Omar Ocampo, researcher at the Institute for Policy Studies.]
House Bill 489 by Rep. Mandie Landry, which would create a new top personal income tax bracket of 4.75% on annual income above $500,000, will be heard in the House Ways and Means Committee on Monday. It would generate nearly $200 million a year for the state general fund, which would be enough to ensure a permanent pay raise for teachers.
Reigning in costly tax breaks
Louisiana gives away more than $7 billion each year through various tax exemptions, exclusions and other tax breaks. But last November, Gov. Jeff Landry and the state Legislature eliminated a host of popular tax credits – and gave Louisiana the highest-in-the-nation sales tax – to partially offset the cost of cuts to income taxes for individuals and corporations. The Times-Picayune | Baton Rouge Advocate’s Tyler Bridges reports on the effort to reign in costly tax giveaways:
(O)ld habits die hard. A number of legislators are seeking to win approval for new tax breaks or expand existing ones, claiming that the incentives will create new jobs and investment. State Rep. Les Farnum rarely buys that argument. “Tax credits are the reason we’re in the shape we’re in financially,” Farnum, R-Sulphur, and the member of the Ways and Means Committee who regularly criticizes granting tax breaks, said in an interview. “We give away so much money. We have a host of brand new requests every year.”
Even tax breaks that have proved to be ineffective can be hard to kill:
One they repealed is called the Quality Jobs Program. It cost taxpayers $150 million in 2023 and produced a return on investment of only 11 cents in state tax revenue for every $1 given away, according to the revenue department. … Legislators also sharply reduced the cost of two other tax breaks with a low rate of return for taxpayers. The cap on tax credits given for movie and TV productions dropped from $180 million per year to $125 million and on investments in historic properties from $125 million to $85 million.
The Quality Jobs Program may be gone, but the Landry administration is pushing to enact a similar program through House Bill 507. The bill by Rep. Julie Emerson would create a new program where state taxpayers cover up to 22% of salary costs for certain “high impact” jobs – up to $200,000 per job. The Legislative Fiscal Office estimates it would cost $347 million over five years.
Raising the homestead exemption
The House Ways and Means Committee advanced legislation by Rep. Matthew Willard this week that would allow individual parishes to increase the homestead exemption for property owners. Brooke Thorington of WRKF-FM reports on the debate surrounding House Bill 271:
The homestead exemption – $7,500 on the first $75,000 value of one’s home – has not increased since 1980, when the average cost of a house in Louisiana was $43,000. Right now, the average price of a home in the state is $200,000. … Williard says people are leaving the state for a number of reasons, and affordable housing is a major problem. Willard said the amended legislation gives parishes final say on increasing the exemption. “ So, if the parish decides not to do it, there’s no impact. If certain parishes decide to do it, they know the impact because they have made the decision to increase it. So for me, it’s a balance, right, said Willard.
WIC benefits aren’t reaching people
The federal Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) finances healthy foods and other support for pregnant and postpartum women and their children. But these crucial benefits reach just over half of eligible families, according to a new report from the Center on Budget and Policy Priorities:
The share of eligible individuals who participated in WIC, referred to as the coverage rate, increased during 2022 according to the most recent estimates published by the U.S. Department of Agriculture (USDA).[4] While this is a positive change following multiple years of decline, still only 53.5 percent of eligible individuals participated in WIC in 2022. Moreover, coverage rates vary widely by geography and participant group, and fewer than half of eligible individuals in some groups participated.
The benefits of increasing WIC participation would help new moms and their children and state budgets:
By improving pregnancy outcomes and child health, WIC may lower Medicaid costs. A 1992 study found that for every $1 spent on WIC during pregnancy, the Medicaid savings during the first 60 days of life ranged from $1.77 to $3.13.[26] A more recent study found that the improved birth outcomes for each additional $1 in spending on prenatal WIC services result in Medicaid savings ranging from $1.24 to $6.83.[27] Also, when WIC utilization increases, more families can purchase nutritious food in local grocery stores.
The coverage rate for WIC in Louisiana was only 37%, the lowest in the nation.
Number of the Day
31% – Percentage of U.S. adults who say the increased cost of healthy foods makes it a lot more difficult for them to eat healthy. (Source: Pew Research Center)