Louisiana’s tax system is broken. It doesn’t bring in enough revenue to pay for the things that allow communities to thrive- strong schools, good hospitals and public safety. It taxes people with low incomes at higher levels than the rich. It doesn’t keep up with economic growth. And it’s riddled with special-interest exemptions and tax breaks.
It’s time to trade the never-ending cycle of budget shortfalls for long-term stability that allows for new investments in Louisiana’s communities. It can only happen with fundamental tax reform that meets some basic principles: Fairness, Adequacy, Competitiveness, Timeliness and Sustainability.
A new report by LBP’s Nick Albares, “Moving from Budget Cuts to State Investments: A Blueprint for a Stronger Louisiana,” provides a series of recommendations for how Louisiana’s tax code can be restructured in a way that generates new revenue and shifts the public debate from a question of “where to cut” to “how to invest” in Louisiana’s working families.
Making these common-sense reforms will allow Louisiana to meet its current obligations to students, families and health care providers while making new investments in priorities that can grow and sustain the middle class: college financial aid, early care and education, affordable housing and public safety.
Increasing New Jersey’s Earned Income Tax Credit (EITC) to 35 percent from 30 percent of the federal EITC will provide over half a million New Jersey working families with a much-needed bump in their take-home pay while giving the state’s economy a boost.
Effective economic policies can expand opportunity and improve the economic security of working families. When everyone in the workforce has access to the education and training needed to reach their full potential, the productivity of those workers and the overall economy improves. When a state has high-quality transportation infrastructure, the economy is also more productive because goods can more easily get to market, employees can get to work more quickly, consumers can more easily reach vendors, and less money is wasted by overdue repairs.
Improving the quality of the education our children receive and the transportation infrastructure our economy relies on requires up-front investments for long term pay-offs. Determining whether and how to raise revenue for these long term investments is a critical challenge for state policy makers. This paper analyzes the evidence on the short and long term effects of investments in the education of our people and in improving our roads, bridges, and public transit systems. It also examines the effects of tax policies that could fund these investments. Currently in Massachusetts the highest-income households pay the smallest share of their income in state and local taxes. We examine the evidence on the likely economic effects of tax reforms that would bring the overall level of state and local taxation for very high-income households close to that of other residents.
The state budget lays the foundation of a strong economy and thriving communities. For Maine to prosper, the budget must address shared problems and work to meet common goals. Good budgets raise enough revenue to make investments that build a stronger workforce, help young families make a good start, support modern infrastructure, and address other goals that benefit all of us now and in the future. However, recent state budgets undermined our ability to meet these goals and instead prioritized tax breaks for the wealthiest Mainers.
Tax breaks that have predominantly benefited wealthy Mainers and corporations jeopardized state capacity to make key investments in a healthier economy and the wellbeing of Maine people. For 2015, general fund spending as a percent of state GDP was at its lowest in 25 years apart from 2010 and 2011 when tax revenue was hard hit by recession. That means state revenue hasn’t kept pace with the costs of maintaining state services or making additional needed investments and costs have shifted to local communities as a result. The voter approved education funding initiative will help buck this trend by increasing taxes on high income households, but more changes are needed to grow and diversify revenue sources to invest in all the elements of a stronger economy.