The decision by state lawmakers in 2018 to stabilize Louisiana’s budget with temporary taxes, which expire next year, has created a half-billion dollar fiscal cliff for current lawmakers to wrangle. But a plan from Gov. Jeff Landry’s administration to move Louisiana to a 3.5% ‘flat’ income tax would make the budget hole much deeper. Invest in Louisiana’s Jan Moller, in a guest column for the Times-Picayune | Baton Rouge Advocate, explains why a flat tax would compound Louisiana’s problems:
The Institute on Taxation and Economic Policy estimates that a flat tax would cost the state $1.1 billion a year in lost revenue. The biggest tax cuts, by far, would go to the richest residents. … Public colleges and universities are bracing for a $250 million reduction in state support that would mean less money for TOPS and other scholarships, program cuts and layoffs that would leave students paying more and getting less. The Louisiana Department of Health is looking at cutting programs that help medically fragile children and seniors get care at home and avoid institutions. These potential cuts — outlined in news reports and public testimony — are only in response to the fiscal cliff and do not account for the additional cuts that would be needed if the Legislature doubles down with a $1.1 billion “flat tax” tax cut.
As Moller explains, there’s a better path forward:
Instead of doubling down on tax cuts, the Legislature should resolve the fiscal cliff by renewing or replacing the revenue that’s being lost and avoiding cuts to critical programs and services. Successful states have economies that provide families with access to high-quality schools, affordable health care and modern infrastructure, but Louisiana doesn’t currently raise enough revenue for any of those things. Doubling down on tax cuts for the wealthy would only take Louisiana farther from that goal.
Learn more on why a flat tax is not the answer for Louisiana.
Principles for the 2025 federal tax debate
Key provisions of the 2017 Trump tax law, which primarily benefited wealthy people and corporations, expire next year. This gives the next president and Congress an opportunity to shape the future of the U.S. tax code. A new report from the Center on Budget and Policy Priorities lays out two principles that policymakers should consider for the 2025 tax debate.
- Tax cuts for people making over $400,000 should end on schedule. Ending the 2017 law’s tax cuts for high-income households — the tax rate cuts, special deductions, and estate tax cuts on massive inheritances — would avoid fully 41 percent of the $3.9 trillion cost of extending the 2017 law over ten years (2026-2035).[1]
- The tax system needs to raise more revenues to finance any tax-cut extensions or new investments. Policymakers need to raise more revenues from wealthy people and profitable corporations, such as by partially reversing the 2017 law’s corporate tax rate cut, to offset any tax cuts they choose to extend or expand for those with incomes below $400,000 and pay for other high-value investments they enact. Additional revenues can also improve our long-term fiscal outlook.
Churches stay cool during hurricane with clean power
South Louisiana communities can expect to spend days or weeks without electric power when major hurricanes hit. The advocacy group Together New Orleans, led by religious congregations around the region, is helping to alleviate some of that suffering with local “resiliency hubs,” which are powered by solar energy and battery storage. The AP’s Isabella O’Malley and Jack Brook, reporting from New Orleans, explain how the Community Lighthouse Project helped people during Hurricane Francine:
Fast forward and two weeks ago, when Francine knocked out power, the church’s Tesla batteries kicked in, charged up by the solar panels on the roof. Text alerts notified the surrounding neighborhood and more than 100 people to show up. Kids ran around with toy trucks and hula hoops. Parents caught a break and ate plates of jambalaya. Diego James, 14, plugged in his phone, played the church piano and helped distribute snacks. People could plug in dialysis machines. Others who didn’t know each other chatted around the outlets.
Early planning can curb cost of climate-change
The impacts of climate change – in the form of more extreme-weather events – pose dangerous risks to neglected public infrastructure. This is especially true for Louisiana, a state susceptible to sea-level rise, extreme precipitation and storms and rising temperatures. The Pelican State has sustained $294 billion in damages from weather events since 1980, only behind Texas and Florida. But as Pew’s Fatima Yousofi and Mollie Mills explain, early planning from state leaders can help curb future costs:
Merely incorporating the long-term costs of climate effects into financial plans is not enough—policymakers should also look for ways to pay for these costs. Governments should identify a mix of potential funding and financing sources, such as federal grants for resilience and adaptation; debt, tailored to the types of infrastructure and governments’ financial needs; and any available state or local resources. Additionally, states can establish or strengthen capital reserve funds or statewide disaster accounts to help cover unexpected costs from natural disasters or extreme weather events.
Number of the Day
$1.1 billion – Amount of revenue that Louisiana’s budget would lose annually under a 3.5% flat tax. The largest share of the tax cut would go to the top 1% of Louisiana income earners. (Source: Institute on Taxation and Economic Policy via Invest in Louisiana)