Gov. Jeff Landry’s plan to cut taxes for large, profitable corporations and wealthy households is moving through House committees, and so is a proposal to rewrite the section of the state constitution that governs taxes and budgeting. But the hardest part of the governor’s tax package awaits action: An estimated $1.4 billion in new and renewed sales taxes to make up the revenue lost by cutting corporate and individual income taxes. The Times-Picayune | Baton Rouge Advocate’s Alyse Pfeil reports on the long list of items that could soon be taxed – everything from home and car repairs to landscaping and ride-share services – and how they will fall hardest on working-and middle-class families:
Paul Braun, a state tax policy analyst for left-leaning advocacy group Invest in Louisiana, noted that lowering income taxes in exchange for taxing consumption puts a heavier burden on low-income households, which end up dedicating a larger portion of their budget to goods and services because of the increased sales taxes. “If the administration really wanted to lighten the tax burden of Louisianans who are struggling the most, they would be more concerned about reducing state sales tax rates,” Braun said.
More broadly, the tax plan would lead to reductions in overall tax revenue, which would force the Legislature to make cuts to important programs and services.
“Our broadest concern about this package as a whole is what it’s going to do to the state fiscally and how hard it’s going to be to balance the budget if this package passes,” Invest in Louisiana’s Jan] Moller said. … “What remains to be a question for me is, will these items actually generate the income that we’re anticipating? Or will we end up finding ourselves in more of a deficit?” [Sen. Regina] Barrow said. “That’s what I don’t know.” She added: “Nobody’s been able to show me any data that can actually substantiate that these business services will generate that kind of money.”
The Times-Picayune | Baton Rouge Advocate’s Tyler Bridges reports that pushback to the tax plan is coming from the film producers, technology companies, and companies that rehabilitate historic buildings, among others, as the tax incentives that support those industries would be scrapped to offset the cost of the corporate tax cut.
On Friday, Tommy Faucheux, a lobbyist for major oil producers, and Brian Landry, a lobbyist for the petrochemical industry, both took pains to praise Landry for offering his tax plan. They then told committee members that ending a tax break for businesses that store goods in Free Trade Zones would stifle investment. Jennifer Marusak, a lobbyist for the Ports Association of Louisiana, followed up by saying eliminating the FTZ break would cost companies $100 million and put the state’s ports at a disadvantage with ports in neighboring states that do offer the tax incentive.
The sacred cow that is ITEP
Gov. Jeff Landry’s tax package aims to eliminate many of Louisiana’s corporate tax breaks. But the state’s Industrial Tax Exemption Program, arguably the most generous property tax break for manufacturers in the country, is not one of them. The Louisiana Illuminator’s Wesley Muller reports:
“We’re not touching ITEP,” Louisiana Economic Development Secretary Susan Bourgeois said in an interview Friday after testifying before the state House Ways & Means Committee. … Louisiana’s ITEP is one of the most generous corporate handouts in the nation, giving large industrial companies, many in the petrochemical sector, an 80% exemption on property taxes for up to 10 years.
Reality check: Property taxes provide local governments with revenue that supports everything from parks and libraries to police and public schools. But manufacturing corporations are not even required to create or retain jobs in order to receive ITEP exemptions under an executive order issued by Landry earlier this year.
Voters reject school vouchers
While president-elect Donald Trump and other congressional Republicans surged to victory during last week’s election, voters also rejected ballot measures promoting school vouchers, a long-held GOP priority. ProPublica’s Eli Hager and Jeremy Schwartz report:
In Kentucky, a ballot initiative that would have allowed public money to go toward private schooling was defeated roughly 65% to 35% — the same margin as in Arizona in 2018 and the inverse of the margin by which Trump won Kentucky. In Nebraska, nearly all 93 counties voted to repeal an existing voucher program; even its reddest county, where 95% of voters supported Trump, said no to vouchers. And in Colorado, voters defeated an effort to add a “right to school choice” to the state constitution, language that might have allowed parents to send their kids to private schools on the public dime.
Voters have never approved the expansion of school vouchers. But that hasn’t stopped state leaders from creating new programs that use taxpayer dollars to subsidize tuition for private or religious schools, many times with no income limits for families. Hager and Schwartz explain:
That includes Arizona, where in 2022 the conservative Goldwater Institute teamed up with Republican Gov. Doug Ducey and the GOP majority in the Legislature to enact the very same “universal” education savings account initiative that had been so soundly repudiated by voters just a few years before. Another way that Republican governors and interest groups have circumvented the popular will on this issue is by identifying anti-voucher members of their own party and supporting pro-voucher candidates who challenge those members in primary elections. This way, they can build legislative majorities to enact voucher laws no matter what conservative voters want.
The GOP’s big fiscal challenge
President-elect Donald Trump and his republican allies in Congress will face the monumental task of tackling America’s ballooning federal deficit. A Washington Post editorial previews the fiscal challenges and urges the new leadership not to exacerbate the nation’s debt:
When Mr. Trump takes office again in January, the national debt will be almost 100 percent of GDP, while the federal budget deficit will be running at roughly 6.6 percent. Real interest rates on Treasury debt, meanwhile, are about double what they were at the start of his last administration. Net interest costs now consume about 3 percent of GDP, and almost 13 percent of all federal spending. … Republicans are now the ones responsible for finding sane, sober solutions to America’s growing fiscal imbalances. At the very least, they must not make them worse, as they did the last time they controlled Washington.
Note: Trump’s economic plans would add $7.5 trillion of debt, according to the Committee for a Responsible Federal Budget.
Number of the Day
257,382 – Number of military veterans living in Louisiana. (Source: U.S. Department of Veteran Affairs)