Tax Justice Digest: Trickle-down revived, corps aren’t paying state taxes, young immigrants and taxes, etc.

In the Tax Justice Digest we recap the latest reports, blog posts, and analyses from Citizens for Tax Justice and the Institute on Taxation and Economic Policy. Here’s a rundown of what we’ve been working on lately. 

Here we go again
The Trump Administration on Wednesday released a tax sketch that is a roadmap for redistributing wealth upward. ITEP Executive Director Alan Essig in a statement said, “Our policymakers owe working people more than tax cuts (for the rich) with unrealistic promises of economic growth.” Among other things, the plan would cut the statutory corporate tax rate to 15 percent from 35 percent. Turns out many profitable Fortune 500 companies are already paying far less than the proposed statutory corporate tax rate. The tax sketch doesn’t include critical details such as how the administration proposes to pay for the plan. But, hey, at least the “biggest tax” cut plan wasn’t sketched out on a napkin.

Read ITEP’s tax reform principles for ideas on true tax reform.

3 Percent and Falling
ITEP today released the state companion report to its federal corporate study that examines effective income tax rates paid by profitable Fortune 500 companies from 2008 to 2015. Thanks to loopholes, subsidies and other tax giveaways, profitable corporations pay an average effective state tax rate of 2.9 percent, which is less than half the nationwide average 6.25 percent state corporate tax rate. Corporations’ declining state taxes come at a time when many states are grappling with how to fill budget gaps. Given these facts, it is hard to understand why some states continue to weigh how to further cut state corporate taxes. Read the study or read a brief blog summarizing the study.


Young Immigrants’ Tax Contributions Increase under DACA Protection
A new Institute on Taxation and Economic Policy report examined the state and local tax contributions of young immigrants eligible for DACA (deferred action for childhood arrivals) and found that, collectively, they annually contribute $2 billion in state and local taxes, but this number would drop by nearly half without DACA protection. The report notes that employment rates go up for young immigrants receiving DACA protection (from 51 percent to 87 percent), and they experience increased wages. Read more

Income Tax Best Solution for Alaska Budget Woes
For years, Alaska was so awash in oil revenue that it didn’t have a state income tax, and it provided all state residents with a yearly payout. Due to market forces, this has changed, and the state is now weighing how to raise enough revenue to fund basic priorities. A new ITEP report looks at Alaska’s revenue-raising options and finds that for most Alaskans, a state income tax would take less from their bottom line than other revenue-raising alternatives. Read a blog about Alaska’s budget concerns or read the full analysis.

The State Rundown
This week, transportation funding debates finally concluded with gas tax updates in IndianaMontana, and Tennessee, and appear to be nearing an end in South Carolina. Meanwhile, Louisiana and Oregon lawmakers debated new gross receipts taxes, and Texas legislators considered eliminating the state’s franchise tax. Read more

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State Rundown 4/27: States Finally Reaching Resolution on Gas Taxes

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This week, transportation funding debates finally concluded with gas tax updates in IndianaMontana, and Tennessee, and appear to be nearing an end in South Carolina. Meanwhile, Louisiana and Oregon lawmakers debated new Gross Receipts Taxes, and Texas legislators considered eliminating the state’s franchise tax. 

— Meg Wiehe, ITEP Deputy Director, @megwiehe  

  • Louisiana Gov. Bel Edward’s Commercial Activities Tax (CAT) was pulled from committee early this week without a vote due to opposition, and it won’t be making any comebacks this legislative session. What comes next? The most concrete idea from the House right now appears to be a “standstill budget,” which would close half of the $1.3 billion hole the state faces with the expiration of the temporary sales tax increase. Bills based on the Task Force for Structural Change recommendations for budget and tax reform have been filed but have yet to be taken up. 
  • While the Gross Receipts Tax debate is wrapping up in Louisiana, it’s just warming up in Oregon, where Sen. Hass has proposed replacing the state’s corporate income tax with a GRT like that used in Ohio, Texas, or Washington. 
  • Texas lawmakers are considering bills in both the House and Senate that would phase out the state’s franchise tax with money from surpluses over a number of years until the tax is eliminated. The franchise tax is the state’s third largest source of income, projected to bring in $7.8 billion over the 2018-2019 budget year. These actions follow the passage of a budget for the coming year that cuts or underfunds health care, financial aid, and more
  • As Nebraska legislators took a break from debating tax proposals this week to focus on the budget, the revenue forecast was adjusted downward yet again, shedding even more doubt on the tax-cut bills debated last week. 
  • Efforts to prevent localities in California from enacting so called “Netflix taxes” (sales taxes on digital streaming services) has failed for the year due to opposition raised by local governments and cable companies. 
  • Tennessee Gov. Bill Haslam’s “IMPROVE Act” — a gas tax update combined with cuts to business taxes, sales tax on groceries, and the Hall income tax – finally passed both houses of the legislature and was signed into law this week. One sticking point in the negotiations, a property tax cut for veterans, was added to the bill in the end. 
  • South Carolina‘s gas tax debate is nearing an end, as the Senate approved a 12-cent-per-gallon increase with a veto-proof majority. However, the bill still has to go to conference committee to work out differences from the House bill, of which there are many. 
  • In other transportation funding news, Montana and Indiana legislatures have approved infrastructure plans that include increases to their fuel taxes. Both plans are expected to receive the signature of their respective governors. Meanwhile, a new report in California shows that the gas tax increase passed by lawmakers earlier this month is a good start but falls short of what is needed to maintain roads in the long-term. And in Colorado, a plan to  raise the sales tax for road funding has met its end in the Senate. And after the effort to raise Alabama‘s gas tax was declared “dead” last week, the latest attempt is a bill to allow counties to put local increases on the ballot for local voters. 

What We’re Reading…   

If you like what you are seeing in the Rundown (or even if you don’t) please send any feedback or tips for future posts to Meg Wiehe at Click here to sign up to receive the Rundown via email. 

Undocumented Immigrants’ Tax Contributions in California: County-by-County Analysis

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Guest Blogger; Josue Chavarin, Program Associate at the California Endowment

California’s counties gain hundreds of millions of dollars in tax revenues from undocumented residents— collectively over $1.53 billion according to a new analysis from the Institute on Taxation and Economic Policy.

Public debates in California over immigrants, specifically around undocumented immigrants, often suffer from insufficient and inaccurate information about the contributions of undocumented immigrants, particularly tax contributions at the local and state level. This new analysis indicates that undocumented immigrants living in the California pay hundreds of millions of dollars each year in local taxes to the counties where they live (more than $1.5 billion) and collectively $3 billion combined in state and local taxes in the state of California.  

As California counties and localities mull over their approach to immigrant rights issues, accurate and objective information about the tax contributions of undocumented immigrants in communities is needed now more than ever. Most state and local taxes are collected from people regardless of citizenship status. Undocumented immigrants, like everyone else, pay sales and excise taxes when they purchase goods and services.  They pay property taxes directly on their homes or indirectly as renters. And, many undocumented immigrants also pay state income taxes. Property, income, and sales and excise taxes are one of the many ways that undocumented residents contribute to the health of California communities.

The new ITEP analysis provides county-by-county estimates on the current state and county level tax contributions of California’s 2.7 million undocumented immigrants as of 2014, and the increase in contributions if all these taxpayers were granted legal status as part of comprehensive reform[1].

Just how much do undocumented Californians contribute California and its counties in tax revenues? We estimate that Undocumented California’s tax contributions total $154 million in the Central Valley, $145 million in Orange County, $110 million in San Diego County, $100.6 million in Santa Clara County, $58.3 million in San Bernardino County, $29.3 million in Ventura County, $29.6 million in Sacramento County, and $544 million in Los Angeles County.  Undocumented immigrants in these counties also pay a variety of state taxes as documented in the table below.

Tax contributions in California would increase significantly above current levels if all undocumented immigrants currently living in the United States were granted a pathway to citizenship as part of a comprehensive immigration reform.  Granting legal status to all undocumented immigrants in the California as part of a comprehensive immigration reform and allowing them to work legally would increase their effective tax rate, thereby increasing their state and local tax contributions.

For example, we estimate that California’s Central Valley stands to gain $14 million, Orange County $14.5 million, San Diego $11 million, Santa Clara $10 million, San Bernardino $6 million, Ventura $3 million, Sacramento $3 million, and Los Angeles $140.6 million. In all, California as a whole stands to gain nearly half a billion dollars ($455 million) in tax revenues under comprehensive immigration reform. This does not include tax contribution increases at the federal level.  

Find the estimates for California’s 35 most populous counties HERE.

[1] Note: To maintain statistical accuracy, counties with smaller populations of undocumented residents were combined.

New State Corporate Study: 3 Percent and Dropping

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States are experiencing a rapid decline in state corporate income tax revenue, and the downward trend has become increasingly pronounced in recent years. Despite rebounding bottom lines for many corporations, a new ITEP report, 3 Percent and Dropping: State Corporate Tax Avoidance in the Fortune 500, 2008 to 2015,finds that effective tax rates paid by profitable Fortune 500 corporations are declining. In fact, since our last study (in 2014) those rates dropped from 3.1 to 2.9 percent of U.S. corporate profits.

The corporate income tax matters to states’ bottom lines and to the overall progressivity of states’ tax systems. In years like this one when more than half of all states face revenue shortfalls and lawmakers across the country are promoting lopsided “tax reforms” that would fall on states’ lower-income residents, it is particularly important for lawmakers to scrutinize the impact of corporate tax avoidance on their state budgets.

In practice, however, 3 Percent and Dropping finds that the opposite is happening. This report comes at a time when lawmakers in a number of states (including Louisiana, Oklahoma, and West Virginia) have considered outright repeal of their state corporate income taxes, and when several other states (including Arizona, Illinois, Indiana, Mississippi, New Mexico, North Carolina, and the District of Columbia) have moved to cut their corporate tax rates.

A variety of policy decisions are driving this decline. In addition to state tax rate cuts, states are providing “incentives” for companies to relocate or stay put. Consider the deal supposedly brokered by President Trump with Carrier in Indiana that included significant state tax breaks. If you think these incentives are too good to be true, they are. A recent New York Times story reported that Carrier did indeed keep some jobs in Indiana after the deal (roughly 800), but still more than 600 people will be out of work. And, there’s a real question about how much the state paid in breaks to retain each job. Blatant manipulation of loopholes by corporate accountants and the continued erosion of state corporate tax bases as a result of ill-advised linkages to the federal tax system also contribute.

States can take steps to strengthen the corporate income tax to ensure that the biggest, most profitable corporations pay their fair share. For more on the steps states can take, read 3 Percent and Dropping.

President Trump’s Corporate Tax Outline: At Least He Didn’t Use a Napkin

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The most complimentary thing that can be said about the corporate tax changes outlined by President Donald Trump earlier this week is that they weren’t scribbled on a napkin. Unlike supply-side architect Arthur Laffer, who infamously sketched out his explanation for why tax cuts can somehow pay for themselves in this manner, the Trump administration took the trouble to fill an entire page (generously double-spaced) with information about how the President proposes to cut taxes as part of his as-yet-unwritten detailed tax plan later this year.

But while the President’s one-pager is clear on the easy questions—he says he’d cut the statutory corporate tax rate from 35 percent to 15 percent, making our corporate tax rate among the lowest among developed nations—the document is virtually content free on the hard question of how this tax cut will be paid for. The document says only that the plan will, “eliminate tax breaks for special interests,” without naming even a single tax break that would fall into that category or giving a sense of how universal that effort would be.

Far from filling the $2.2 trillion 10-year budget hole that would be created by cutting the corporate rate to 15 percent, in fact, Trump’s one-pager digs the hole deeper by proposing a move to a territorial tax system, opening the door for rampant tax avoidance by permanently exempting any income companies claim they earn offshore. And even the one apparent “revenue raiser” in Trump’s corporate outline (a one-time tax on the $2.6 trillion companies are currently claiming to hold offshore) should be thought of as a revenue loser, since these profits ought to be taxable at a rate closer to 35 percent than the 10 percent transition tax Trump has proposed in the past.

At a time when U.S. corporate tax collections are near historic lows as a share of the economy due to pervasive tax avoidance, and when the country faces persistent budget deficits, the first step toward corporate tax reform should be a detailed plan for ending wasteful corporate tax dodges, putting a name on each specific tax break that is deemed unaffordable or ineffective and identifying a plan for reform—or repeal. This week’s corporate tax outline sends a clear signal that the Trump administration is not at all serious about taking even this first step toward true reform, and is likely bent on simply pushing through exactly what Trump promised last week: “maybe the biggest tax cut we’ve ever had.”

Does a 15 Percent Corporate Tax Rate Sound Low? For Dozens of Major Corporations, Maybe Not

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President Donald Trump has promised to release new details Wednesday on what he says could be “the biggest tax cut we’ve ever had.” While much is unclear about the shape this plan will take, the Wall Street Journal reported yesterday that it will include a 15 percent tax rate on corporate profits, less than half the 35 percent statutory rate currently in effect.

If this sounds like a gigantic tax cut, that’s because it is: the corporate tax is projected to collect $320 billion in 2017, and Trump’s rate cut taken on its own would give away more than half of that. But as a recent ITEP report found, plenty of the biggest and most profitable corporations could be forgiven for being unimpressed by the plan: of 258 Fortune 500 corporations that have been consistently profitable over the last eight years, 69 companies—more than a quarter of them—paid an effective federal income tax rate of less than 15 percent over the eight-year period. These include Honeywell (14.9 percent), ExxonMobil (13.6 percent), FedEx (13.2 percent), Amazon (10.8 percent), United Technologies (10.4 percent), Verizon (9.1 percent), Time Warner Cable (7.8 percent), Boeing (5.4 percent), CBS (5.4 percent), and tax-avoidance industry leader General Electric, which paid a negative federal effective tax rate of -3.4 percent over the eight-year period. And 167 of these companies found a way to pay less than 15 percent in at least one year during this period, which means about two-thirds of profitable Fortune 500 corporations are already quite familiar with the experience of paying less than Trump’s proposed 15 percent rate.

These numbers suggest that the first sensible step toward corporate tax reform should be closing the many legal tax loopholes that make this widespread tax avoidance possible. We may find out tomorrow whether President Trump intends to answer the hard questions about tax reform—that is, how to pay for it—or whether he’ll continue to focus on the easy part by offering huge new giveaways to his wealthiest and most influential constituents. But early indications are that the President’s approach to corporate tax reform is precisely the opposite of what’s needed to ensure a sustainable and fair tax system going forward. 

Income Tax Offers Best Bang for the Buck in Alaska

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Earlier this month the Alaska House of Representatives voted 22-17 in favor of implementing a personal income tax for the first time in over 35 years. Gov. Bill Walker praised the bill shortly after passage, citing its ability to “provide a steady source of funding for essential services like public education and state troopers,” and the need to “stop the draw on our precious savings” that the state accumulated during times of high oil prices.

But leaders in the Alaska Senate have taken a decidedly different position. Senate President Pete Kelly has pledged to “stonewall” the reinstatement of an income tax and recently wrote that “the only thing standing between you and an income tax is the Senate.”

But is this stonewalling doing Alaskans any favors? A new ITEP report shows that for most Alaskans, an income tax would be less costly than other revenue-raising alternatives such as cutting the state’s Permanent Fund Dividend (PFD) payout or implementing a statewide sales tax or payroll tax. Because an income tax would collect significant revenue from Alaskans with very high incomes, middle- and low-income Alaska families would not have to pay quite as much for the state to raise any target amount of revenue.

ITEP’s report examines five hypothetical policy options designed to raise equal amounts of revenue: $500 million per year to put toward closing the state’s budget gap. The report finds that for Alaskans across the bottom 80 percent of the income distribution, an income tax modeled after the one that recently passed the Alaska House of Representatives would have a smaller impact than either a cut to the PFD or a new payroll tax designed to raise the same amount of revenue. When comparing an income tax to a potential statewide sales tax, ITEP finds that the income tax option would be cheaper for Alaskans across at least the bottom 60 percent of the income distribution.

As things currently stand, the most relevant comparison is between an income tax paired with cuts to the PFD payout (the House’s preferred solution), or deeper cuts to the PFD with no income tax at all (the Senate’s preferred approach).

As the chart accompanying this post shows, PFD cuts fall hardest on Alaskans with very low incomes, for whom the PFD is critical in helping to make ends meet. High-income families, by contrast, would have trouble even noticing a reduction in their PFD. A PFD cut designed to raise $500 million for public services, for instance, would cost the top 1 percent of Alaska earners just 0.2 percent of their overall income.

An income tax, by contrast, could be designed to require relatively low payments from families in or near poverty, and higher payments from wealthier Alaskans most able to afford a higher tax bill.

While a true solution to Alaska’s fiscal problems is sure to include a mix of various policy changes, this report should help to illuminate what different mixes would mean for different Alaskans. In particular, middle- and low-income Alaskans should know that under a fiscal package of any given size, balancing that plan to rely more on income taxes and less on PFD cuts is likely to be in their own financial best interest.

Read ITEP’s new report: Comparing the Distributional Impact of Revenue Options in Alaska

Young Undocumented Immigrants Pay Taxes Too

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A few weeks ago, a young undocumented immigrant posted a photo on Facebook after filing her taxes that went viral. The young woman, Belen Sisa, is one of 1.3 million young people who are currently eligible for temporary work authorizations and deferred deportation action through DACA (Deferred Action for Childhood Arrivals). President Obama signed the executive that created DACA in 2012. The program has a stringent application process that includes extensive background checks, education and residency requirements.

DACA recipients are young people who were brought to the U.S. as children outside of their control. They grew up in this country and rightly consider it home. Young undocumented immigrants want to give back to the country they grew up in, and DACA has helped them do that. The overwhelming majority of DACA recipients are currently working or in school. A national survey of DACA enrollees in 2016 found that more than 40 percent of respondents secured their first job after enrollment in DACA, and more than 60 percent landed a job with better pay. DACA enrollment also allowed 60 percent of respondents to pursue educational opportunities that were previously unavailable to them.

Increased opportunities for DACA recipients also benefits communities. When given the opportunity to work legally and a reprieve from deportation, DACA recipients are able to work more, earn more wages, and are less likely to be victims of wage theft from unscrupulous employers. This means they are also able to contribute more to state and local tax streams.

As ITEP’s March report demonstrated, undocumented immigrants contribute $11.74 billion annually in state and local taxes. A new ITEP report, State & Local Tax Contributions of Young Undocumented Immigrants, shows that $2 billion is contributed by young undocumented immigrants who are eligible for or receiving DACA.

But despite the demonstrated fiscal and societal benefits of DACA, the actions and words of President Trump and his administration fail to demonstrate clear support for the program. On the campaign trail, President Trump vowed to do away with the program, but after taking office he has said he has a “big heart” so DACA recipients shouldn’t be “very worried” and as recently as last week Attorney General Jeff Sessions stated that immigrants brought to the U.S. as children are “subject to being deported.” On Sunday, Sessions contradicted his original statement claiming the Department of Justice isn’t going to “round up everybody” but rather focus on the “criminal element.” And Homeland Security Secretary John Kelly stated that DACA recipients are not being targeted just days after reports came out that a current DACA recipient, Juan Manuel Montes, who had lived in the U.S. since he was nine years old was deported to Mexico.

DACA recipients are not the only people with something to lose if we fail to maintain DACA protections. The young immigrants eligible for deferred action contribute tax dollars to communities that help pay for schools, public infrastructure, and other services. If the 852,000 young immigrants currently enrolled lost the protections of DACA, it would reduce their state and local tax contributions by nearly $800 million. If we fail to protect this population from deportation, the nation risks forcing them back into the shadows and losing the economic and societal contributions these engaged young people are making in our communities.

Young undocumented immigrants are our classmates, coworkers, neighbors, and much more. They deserve more than empty words from politicians. They deserve the protections our government promised them through DACA. In the words of Juan Escalante, a DACA recipient who shared how and why he and his undocumented parents pay their taxes, “they have to do right by the country that has given their family a better life and opportunities.” We have to do right by them too.

The Trump Administration Should Not Reopen Offshore Loopholes Closed by Recent Regulations

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A new executive order signed by President Donald Trump on Friday asks that Treasury Secretary Steven Mnuchin review significant tax regulations issued in 2016. The broader context of the order is that President Trump is seeking to roll back regulations across the government – many of which he claims are overly burdensome – and could potentially target critical Treasury regulations such as two recent rules curbing corporate inversions. Any attempt to reopen tax loopholes closed by recent regulations would be counterproductive to the goal of creating a fair tax system and should be rejected.

One of the loopholes in the corporate tax code that has gotten the most attention in recent years is the corporate inversion loophole, which allows U.S. companies to pretend to be foreign on paper by merging with another company (often a much smaller company). Despite their claims to be foreign companies, inverted companies often continue to be managed and controlled in the United States and can still be considered foreign even if a company is owned by a majority of its original U.S. stockholders after the merger. By claiming to be a foreign company, inverted companies avoid billions in U.S. taxes by artificially shifting more of their profits offshore or avoiding taxes on their existing offshore earnings. In fact, one estimate found that partially closing the inversion loophole would raise as much as $40 billion over the next ten years.

In the face of continued inaction by Congress to close the loophole, Treasury stepped up its anti-inversion actions in recent months by using its regulatory authority to crack down on the worst abuses of this loophole. In October 2016, the Treasury finalized the so-called earnings stripping rule, which limited the ability of companies to load up their U.S. subsidiaries with debt as a way to shift income out of the U.S. into low-tax jurisdictions. While incomplete, by limiting earnings stripping the rule curbs the incentive companies have to invert as a way to fully take advantage of this tax avoidance technique. In January, the Treasury finalized the so-called serial inverter rule, which disregards newer inversions in determining whether anti-inversion rules apply to a company, which makes it harder for companies to avoid existing anti-inversion regulations.

Reversing these rules would also represent a significant turnabout from President Trump’s rhetoric on offshoring issues. During the presidential campaign, then candidate Trump called Pfizer’s attempt to invert by merging with Allergan “disgusting” and said that “politicians should be ashamed” of the deal. This inversion was stopped in its tracks by the Treasury’s serial inverter rule, which means that any reversal of this rule could bring back the possibility of this or similar “disgusting” deals in the future.

Rather making inversions easier by reversing these rules, the Trump Administration should support legislation that closes the corporate inversion loophole entirely. For example, the Trump Administration should embrace legislation such as Representative Lloyd Doggett’s Corporate EXIT Fairness Act, which would require companies to pay what they owe on their unrepatriated earnings before expatriating and no longer allow companies with a majority U.S. ownership after a merger to claim to technically invert. More broadly, policymakers should be seeking to close tax loopholes either through legislation or administration action, not making them larger as rolling back the anti-inversion regulation would do.

No Room to Swing a CAT in Louisiana Legislature

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The Louisiana Legislature has been in session for two weeks now. The stage has been set for fiscal reform and the stakes are high. The state faces a $1.3 billion loss of revenue starting July 1, 2018 when the temporary sales tax base expansion and rate increase expires if lawmakers fail to close the gap this legislative session. (State law prohibits the adjustment of taxes during the 2018 regular session.)

After years of repeated budget cuts, the appetite to cut an additional $1.3 billion doesn’t appear to be there. Reform-minded revenue raising is understood broadly to be a necessary part of reaching a solution.

But getting there will prove to be difficult.

This isn’t due to a lack of focus or shortage of ideas. The Task Force on Structural Changes in Budget and Tax Policy has been working on recommendations for “comprehensive solutions for a sustainable tax and spending structure” since last fall. The Louisiana Budget Project has proposed a Blueprint for a Stronger Louisiana. A few lawmakers have put forward suggested reform packages that have received early hearings this session.

But income tax reforms are apparently a non-starter with a large enough group of lawmakers that many of these progressive revenue solutions are being viewed as politically inviable. In light of this, Gov. Bel Edwards has presented a reform plan that includes a Commercial Activities Tax (CAT) at its core, catching many off guard and drawing early and growing opposition from the business community.

The CAT will get its first formal hearing this coming Monday in the House Ways and Means Committee, where it is expected to die a bloody death. The governor has not issued a “Plan B” reform plan, calling on oppositional lawmakers to be proactive participants in the process and present alternatives.

If income taxes and major reforms to corporate taxes are really off the table, this leaves the sale tax as the only major revenue source to tap for reform. While expansion of the sales tax through taxing certain services and eliminating current exemptions could replace an estimated $700 million of lost revenue from the expiration of the temporary sales tax increase, this is just over half of what is needed to fill the budget hole, let alone restore investments in priorities like the TOPS program. Without consensus on other revenue sources, making the sales tax increase permanent—giving Louisiana the highest combined state and local sales tax rate in the nation—may become the more tempting solution for lawmakers to reach for.

However problematic lawmakers may find the CAT or personal income tax reforms to be, simply extending the sales tax increase won’t resolve Louisiana’s revenue problems and it will make taxes more unfair. An ITEP analysis of the temporary sales tax increase versus the governor’s proposal shows how the bottom 95% of taxpayers pay more under the sales tax increase than they would under the governor’s plan, while the richest 5% of taxpayers pay less. (This is true even given the recently revised revenue estimates for the Commercial Activities Tax.)

As the governor said, “Fiscal reform is hard. It requires people to have some courage.” Until they do, this legislative session will continue to feel like a cat on a hot tin roof.