Hopes have dimmed considerably that the federal government will address the “fiscal cliff,” or the combination of tax increases and spending cuts created by last year’s budget deal among Democrat Pres. Barack Obama, a Democrat-led Senate, and a Republican-led House, before the Dec. 31 deadline, after which those go into effect. And that may turn out as a net benefit to Louisiana, at least as far as the direct impact of individual income tax changes.
Some have wailed and gnashed their teeth over the prospect. One estimate argues that the deal would cost the state 28,000 jobs as taxes go up on just about everybody and federal spending is curtailed. In addition, as federal income taxes may be written off from those for the state, an increase in those means less revenue for Louisiana.
Other complain that the impending changes will affect the poor negatively, especially in that Louisiana ties its earned income tax credit and child care tax credit breaks to the presence of the federal ones, which would go away. The former affects only the lowest income earners, while the latter allows disproportionately more money to stay in the pockets of the lower earners and subsidizes a special interest industry.