When states reduce cash assistance for low-income, needy families it results in increased child neglect, according to a new report from Health Affairs. When Congress replaced the nation’s cash welfare program with an annual federal block grant – the Temporary Assistance for Needy Families (TANF) program – states sharply reduced the number of families receiving cash assistance and did little to nothing to meaningfully help poor families meet their needs without that aid. Donna K. Ginther and Michelle Johnson-Motoyama, authors of the report, explain the relationship between TANF and child welfare. 

We found that each additional TANF policy that restricted access to benefits was associated with a 13 percent reduction in TANF caseloads. Using TANF policies as an instrument, we found that increases in TANF caseloads were associated with significant reductions in numbers of neglect victims and foster care placements. In two-way fixed effects models, restrictions on TANF access were associated with more than forty-four additional neglect victims per 100,000 child population and between nineteen and twenty-two additional children per 100,000 placed in foster care. Our findings suggest that additional research using data that capture the nuances of maltreatment should be used to investigate the relationships among TANF policies, child maltreatment, and foster care placement.

Tax cuts for rich increase burden for everyone else
Last year saw a plethora of regressive state tax policies across the country, and there are more on the horizon for 2023. As states are awash in historic budget surpluses because of unprecedented federal aid, many have or are considering implementing a flat personal income tax or eliminating their personal income tax altogether. Vox’s Whizy Kim explains what happens when states refuse to raise money from wealthy constituents – and who’s left to foot the bill. 

Tax havens are “hollowing out state tax bases in a way that results in everyone else paying a higher share of state tax dollars than would otherwise be the case,” Carl Davis, research director at the Institute on Taxation and Economic Policy, told Vox. “If states aren’t able to raise this money from the wealthy, they’re going to raise it from the middle-class and low-income families instead.” They raise money from middle- and low-income residents by relying heavily on sales taxes. The cost of a good, and the tax on it, after all, is the same for everyone, but takes a greater proportion of your earnings if you’re poor than if you’re a billionaire.

There’s an effort, led by state Rep. Richard Nelson, to scrap Louisiana’s personal and corporate income tax. Eliminating this tax would shift the responsibility for paying taxes from wealthy people and corporations to low-income Louisianans and small businesses, and make it much harder to balance the state budget each year. 

Edwards has full slate of plans for final year
Gov. John Bel Edwards enters his final year as governor with a slew of accomplishments that will define his legacy. Working with the Legislature, Edwards has stabilized the state budget after inheriting a huge deficit from former Gov. Bobby Jindal, overseen multiple teacher pay raises and made Louisiana the first state in the Deep South to adopt a climate action plan. As The Advocate’s Tyler Bridges explains, Edwards’ plan for 2023 includes pushing back against election-year tax cut schemes that could rip a hole in the state budget. 

And that’s why he resists calls from some conservatives to cut taxes in 2023 by phasing out a temporary sales tax two years early. That sales tax increase of .45 cents per $1 is scheduled to disappear in mid-2025 unless the next governor and Legislature choose to extend it in 2024. Instead of it being spent on new programs, Edwards said a good portion of the surplus will go to pay down state debt, to cover higher-than-expected road and bridge construction costs and to the state’s rainy day fund — he said it would have $900 million, more than when he took office.

Biden administration defends student loan cancellation plan
The Biden administration asked the Supreme Court on Wednesday to uphold its student loan cancellation plan as a lawsuit from a group of Republican-led states threatens debt relief for millions of Americans. An estimated 646,000 Louisianans hold a collective $22.7 billion in federal student loans. This debt can sometimes weigh people down long into their careers, preventing them from buying homes or making other investments in their futures. The New York Times’ Peter Baker reports

The justices plan to hear arguments in February and left in place an injunction issued by a lower court blocking the administration from proceeding with the program until the legal questions have been resolved. The program would forgive as much as $20,000 in debt for as many as 40 million borrowers making under $125,000 a year. More than 16 million potential beneficiaries have already been approved for the relief if the court allows the program to proceed, and millions more have applied. The administration said that nearly 90 percent of the benefits would go to borrowers who had already finished school and were making less than $75,000 a year.

Louisiana will be one of the biggest beneficiaries of President Joe Biden’s student debt cancellation plan In total, 40% of all Louisiana adults and 13% of the state’s population are eligible for the plan.

Number of the Day
8.4 million – Number of American workers that received a pay raise this week as minimum wage increases in 23 states and Washington, D.C. went into effect. Louisiana does not have a state minimum wage and defaults to the federal rate of $7.25 per hour. (Source: Axios via Economic Policy Institute)