State Rundown 4/20: New Tax Changes in Full Bloom

This Spring looks to be bringing a mix of showers and flowers as states around the nation continue to act on a range of tax proposals. The Kentucky General Assembly rained on the governor’s veto of a bill that will reduce the state’s flat income tax when they voted to override it before the session ended. In Maine, however, weeks of back-and-forth negotiating has culminated in a budget agreement that will send a bouquet of positive changes to residents, including $850 in targeted relief payments, an increase the Earned Income Tax Credit, and expansion of the property tax credit. And an initiative in Idaho that seeks to increase the corporate income tax and personal income tax on wealthy filers to help fund education services looks to have reached peak bloom, as supporters have announced that they have collected enough signatures to qualify it for the November 2022 ballot. Lawmakers in the Gem State took major action this session when they reduced the corporate income tax and lowered the top income tax rate.

Major State Tax Proposals and Developments

• The KENTUCKY General Assembly has handily overridden Gov. Andy Beshear’s veto of House Bill 8. Among other things, the bill will lower the state’s flat income tax from 5 to 4 percent over the next two years and includes triggers to lower the rate further. – NEVA BUTKUS
• MAINE Gov. Janet Mills signed the supplemental budget into law. The budget includes one-time payments of $850 for single filers earning less than $100,000, heads of household earning less than $150,000, and joint filers earning less than $200,000. The bill includes changes that will double the earned income tax credit and expand the property tax fairness credit. – MARCO GUZMAN
• An IDAHO initiative that would increase income taxes on top earners to help fund education services has surpassed the required vote threshold, qualifying it for the November ballot. The initiative, specifically, would create a new top tax bracket of 10.925 percent for single filers earning over $250,000 and joint filers earning over $500,000, and increase the corporate income tax from 6 percent to 8 percent – the level it was from 1987 to 2000. – MARCO GUZMAN

State Roundup

• CALIFORNIA lawmakers are discussing three targeted progressive tax proposals. A proposed increase to the existing renter’s credit has advanced from committee, a one-time child tax credit of $2,000 for families with income below $30,000 is also on the table, and negotiations are ongoing to better target Gov. Gavin Newsom’s proposed gas tax rebate.
• DELAWARE Gov. John Carney signed legislation that will send $300 in direct payments to every resident who filed a 2020 tax return. This is expected to cost the state $2 to $3 million.
• MARYLAND lawmakers decided against extending the 30-day gas tax holiday that ended this past Sunday.
• The city of Ann Arbor, MICHIGAN, is receiving $1.4 million in marijuana tax revenue this year. City leaders are discussing how to spend the money and have proposed numerous programs for low-income residents that would improve housing conditions, the affordability of utilities and school supplies and apprenticeship programs for city public works jobs.
• The MISSOURI House Budget committee has approved a $1 billion tax break that would provide a non-refundable rebate of $500 for single filers and $1,000 for married filers.
• MONTANA lawmakers on both sides of the aisle voted unanimously to oppose a proposed constitutional initiative that would impose strict caps on property taxes. Supporters of the initiative, however, still have until June 17 to collect 60,000 signatures to get the measure on the 2022 ballot.
• NEBRASKA is the latest state to exempt feminine hygiene products from its sales tax.
• NEW JERSEY lawmakers are also debating gas tax relief and rebates. A new bill, with a price tag of roughly $1.9 billion, would offer $500 rebates to joint filers making up to $250,000 and $250 for single filers. Another bill would lower the state gas tax for 60 days.
• The NEW HAMPSHIRE Senate will vote on a proposal to lower the business profits tax rate by a point to 7.5 percent tomorrow. The bill is expected to pass.
• At his final budget address, PENNSYLVANIA Gov. Tom Wolf proposed cutting the 9.99 percent corporate net income tax (CNIT) to 7.99 percent in 2023 and decreasing it each year until it reaches 4.99 percent. Last week, the Senate Finance Committee held a hearing about expanding the state film tax credit program, even though Good Jobs First has highlighted the program’s lack of transparency. Lastly, a new bill would cut the gas tax by one-third through the end of the year.
• VIRGINIA lawmakers continue to work on a two-year state budget during the special session and debate key issues like gas tax holidays and lowering the grocery tax. The House Finance Committee advanced Gov. Youngkin’s gas tax holiday proposal over the gas tax rebate proposed by House Democrats.

What We’re Reading

• In a blog, ITEP’s own Kamolika Das takes the myth of states benefiting from income tax elimination to task.
• National Public Radio reports on Washington State’s long-term care program, the revisions it is currently undergoing, and how other states are thinking about the issue of caring for an aging population.
• Professor and blogger James Edward Maule explains the many reasons he thinks gas tax suspensions are a bad idea.
• Carl Davis and Mike Hegeman from ITEP released a report highlighting the increase in cannabis revenues compared to tax revenue from alcohol sales.

 

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