Sales tax to finance tax cuts?

Gov. Jeff Landry’s tax overhaul plan aims to cut income taxes for individuals and corporations, and to partially offset the cost of those cuts by eliminating a suite of popular tax credits and raising more revenue from Louisiana’s highest-in-the-nation sales tax. But that plan could be falling apart, as legislators are balking at efforts to expand the state sales tax to services, and appear eager to preserve the subsidy programs that attract film, digital media and historic preservation projects. As The Times-Picayune | Baton Rouge Advocate’s Tyler Bridges explains, the Senate Revenue and Fiscal Affairs Committee is expected to make changes to the bills on Tuesday: 

One idea under serious consideration would be to hike the state sales tax by half a cent, even though Louisiana already has the highest local and state sales tax rate combined in the country and a higher sales tax hits the poor the hardest. Raising the sales tax would spare some special interests from giving up their tax breaks. Lobbyists filled the Senate Revenue & Fiscal Affairs Committee hearing room Monday. “After I wake up in the morning, I begin to get non-stop texts from different groups and organizations that either want clarifications or want to keep their tax breaks,” [Senate Revenue & Fiscal Affairs Committee chair Franklin ] Foil said afterward.

If legislators agree to that plan, they would essentially be financing income-tax cuts for the wealthy on the backs of low-income Louisianans: 

The higher sales tax would also increase the “regressivity” of Louisiana’s overall tax system, where households that earn $18,800 or less pay 13.1% of their income in taxes while families with incomes above $552,000 pay only 6.5%, according to the Institute on Taxation and Economic Policy, a Washington, D.C.-based group that favors a progressive tax system. … A household that earns $50,000 to $60,000 would get a $301 tax cut under Landry’s original proposal, while one that earns between $500,000 and $600,000 would receive a $5,181 tax reduction, according to an analysis by former legislative economist Greg Albrecht for three nonprofit groups.

The House pushed back on a proposal last week that would generate $500 million annually by expanding the state sales tax to 41 different services. The Louisiana Illuminator’s Wesley Muller reports that Rep. Neil Riser has proposed an amendment to scale down House Bill 9 and the revenue it generates. The legislation is scheduled for debate in the lower chamber on Tuesday:

Riser took to the floor Monday to announce he had filed an amendment to his bill that would cull the list of services to 19. Among those removed are property construction, repair services, warranty agreements, tow truck and wrecker services, waste collection and others. Riser also pointed out it would likewise reduce the amount of tax revenue that could be generated from an estimated $500 million per year to $130 million.

Note: Invest in Louisiana has released new resources to help you navigate the complicated, rushed special session. Our new analysis shows that proposed tax increases, even in their current form, won’t fully offset the dollars lost from cutting taxes. And our new fact sheet provides a complete overview of the session and explains why this rushed effort is the wrong way to reform Louisiana’s tax structure. 

Sending kids to adult jails

A group of mental health professionals and educators is urging legislators to vote against a constitutional amendment that would make it easier to send children to adult jails. Current law already allows prosecutors to charge juvenile offenders as adults for certain violent crimes. But as the Louisiana Illuminator’s Julie O’Donoghue explains, Senate Bill 2 would expand that discretion to any crimes:   

For example, all four underage youth involved in the 2022 carjacking and murder of 74-year-old Linda Frickey in New Orleans were tried and convicted as adults earlier this year. But if passed, Cloud and Villio’s constitutional amendment wouldn’t limit the prosecution of younger teenagers as adults to just violent offenses. It would allow, for the first time in 50 years, minors to be charged as adults for “any crimes,” if lawmakers passed legislation to do so.

A Times-Picayune | Baton Rouge Advocate editorial questions the substance and timing of the proposed constitutional amendment:

While consideration of this bill is technically allowed under the terms of the special session call by Landry, it is nonetheless likely to be lost in the blizzard of tax proposals and amendments that are flying around. And rather than directly attacking crime, the proposed amendment would simply transfer power from the people to the Legislature. We fail to see how that would make us safer. 

How will Trump impact environmental justice efforts?

Environmental justice advocates in Louisiana, a state with a history of prioritizing polluters over its people, have benefited in recent years from  investments from the Biden administration. But many of these leaders are growing concerned about what a second Trump presidency means for their efforts. Verite’s Safura Syed explains how they are coping and preparing for what’s next:  

“We’ve always had to fight, especially as Black people, as people of color, as low-income people, we have always had to fight,” (activist Roishetta) Ozane said. “We have always found a way to survive and thrive in our communities and the government is not who is going to save us. We are going to save ourselves.” In the coming months, Ozane said she will organize and strategize to try to get the Biden administration to fulfill some of her environmental protection goals. Ozane and other Louisiana environmentalists are poised to increase community outreach and form networks that will help them protect themselves, with or without support from the federal government. 

The benefits of ACA enhanced tax credits

Enhanced premium tax credits (PTCs) have made health insurance through the Affordable Care Act marketplace more affordable for millions of people. But Congress will soon have to decide whether to extend or make permanent these credits or allow them to expire at the end of 2025. Jennifer Sullivan of the Center on Budget and Policy Priorities explains the numerous benefits of PTCs and the consequences if Congress fails to act: 

The enhanced PTCs remain available through the 2025 coverage year, but the enhancements will expire at the end of December 2025 unless Congress acts. If Congress fails to act, people in every state will face sharp premium increases for 2026 coverage, and millions of people (3.8 million, the Congressional Budget Office estimates) will lose coverage because they will no longer be able to afford it. During this year’s open enrollment, though, it’s important to understand that the enhanced PTCs will continue through 2025.

Number of the Day

$130 million – Estimated annual revenue that would be generated from a scaled-back proposal to expand the state sales tax to 19 services. House Bill 9, in its original form, would’ve raised $500 million by levying sales taxes on more than 40 services. (Source: Louisiana Illuminator)