Maryland

An updated version of this brief for 2019 is available here. Read this report in PDF. Overview Sales taxes are an important revenue source, composing close to half of all state tax revenues.[1] But sales taxes are also inherently regressive because the lower a family’s income, the more the family must spend on goods and […]

Despite some challenging tax policy debates, a number of which hinged on states’ responses to federal conformity, 2018 brought some positive developments for workers and their families. This post updates a mid-session trends piece on this very subject. Here’s what we have been following:

With many state fiscal years beginning July 1, most states that will make decisions this year about federal tax conformity have now done so, so it is now time for an update on how well state policymakers have kept to, or veered from, the path we charted out earlier this year. Most states that have enacted laws in response to the federal changes have adhered to some but not all of the principles we laid out, with a few responding rather prudently and a handful charting a much more treacherous course of unfair, unsustainable policy based on unfounded promises of…

A rare sight is coming to Oklahoma. The last time the Sooner State raised its gas tax rate, the Berlin Wall was still standing, and Congress was debating whether to ban smoking on flights shorter than two hours. Fast forward 31 years, and Oklahoma is finally at it again. On Sunday, the state’s gas tax rate will rise by 3 cents and its diesel tax rate by 6 cents. Both taxes will now stand at 19 cents per gallon—still among the lowest in the country. But Oklahoma isn’t the only state where gas taxes will soon rise.

Cash-strapped, tax-averse state lawmakers continue to seek unconventional revenue-raising alternatives to the income, sales, and property taxes that form the backbone of most state tax systems. However, gambling revenues are rarely as lucrative, or as long-lasting, as supporters claim.

The federal Tax Cuts and Jobs Act (TCJA) enacted last year temporarily capped deductions for state and local tax (SALT) payments at $10,000 per year. The cap, which expires at the end of 2025, disproportionately impacts taxpayers in higher-income states and in states and localities more reliant on income or property taxes, as opposed to sales taxes. Increasingly, lawmakers in those states who feel their residents were unfairly targeted by the federal law are debating and enacting tax credits that can help some of their residents circumvent this cap.

An updated version of this blog was published in April 2019. State tax policy can be a contentious topic, but in recent years there has been a remarkable level of agreement on one tax in particular: the gasoline tax. Increasingly, state lawmakers are deciding that outdated gas taxes need to be raised and reformed to fund infrastructure projects that are vital to their economies.

Many state governments are struggling to repair and expand their transportation infrastructure because they are attempting to cover the rising cost of asphalt, machinery, and other construction materials with fixed-rate gasoline taxes that are rarely increased.

This Arbor Day week, the seeds of discontent with underfunded school systems and underpaid teachers continued to spread, with walkouts occurring in both Arizona and Colorado. And recognizing the need to see the forest as well as the trees, the Arizona teachers have presented revenue solutions to get to the true root of the problem. In the plains states, tax cut proposals continue to pop up like weeds in Kansas and threaten to spread to Iowa and Missouri, where lawmakers are running out of time but are still hoping their efforts to pass destructive tax cuts will bear fruit.

This week the IRS website asked some would-be tax filers to return after December 31, 9999. State legislators don't have quite that much time, but are struggling to wrap up their tax debates on schedule as well. Iowa legislators, for example, are ironically still debating tax cuts despite having run out of money to cover their daily expenses for the year. Nebraska's session wrapped up, but its tax debate continues in the form of a call for a special session and the threat of an unfunded tax cut going before voters in November. Mississippi's tax debate has been revived by…

We're highlighting the progress of a few newer trends in consumption taxation. This includes using the tax code to discourage consumption of everything from plastic bags to carbon and collecting revenue from emerging industries like ride sharing services and legalized cannabis sales.

This Friday the 13th is a spooky one for many state lawmakers, as past bad fiscal decisions have been coming back to haunt them in the form of teacher strikes and walk-outs in Arizona, Kentucky, and Oklahoma. Meanwhile, policymakers in Maryland, Nebraska, New Jersey, Oregon, and Utah all attempted to exorcise negative consequences of the federal tax-cut bill from their tax codes. And our What We're Reading section includes yet another stake to the heart of the millionaire tax-flight myth and other good reads.

This week, Kentucky legislators passed a bill shifting taxes onto low- and middle-income families, Oklahoma legislators reached a deal on education funding, and their counterparts in Kansas proffered multiple proposals for their education funding needs. Meanwhile, tax debates are coming down to the wire in Iowa, Missouri, and Nebraska, and responses to the federal tax-cut bill were settled on in Maryland, New York, and Wisconsin.

The Amazon HQ2 project would be the biggest in U.S. history as measured in projected jobs, yet little is known about the incentives cities have offered Amazon to lure its second headquarters. This lack of disclosure prevents public participation in the deal, including raising important questions about whether tax incentives that cities are offering are in the best short- and long-term interest of their residents. This is the main finding of Public Auction, Private Dealings: Will Amazon’s HQ2 Veer to Secrecy Create A Missed Opportunity for Inclusive, Accountable Development?, a Good Jobs First study released today.

This has been a big year for state action on tax credits that support low-and moderate-income workers and families. And this makes sense given the bad hand low- and middle-income families were dealt under the recent Trump-GOP tax law, which provides most of its benefits to high-income households and wealthy investors.   Many proposed changes are part of states’ broader reaction to the impact of the new federal law on state tax systems. Unfortunately, some of those proposals left much to be desired.

The onset of spring this week proved to be fertile ground for state fiscal policy debates. A teacher strike came to an end in West Virginia as another seems ready to begin in Oklahoma. Budgets were finalized in Florida, West Virginia, and Wyoming, are set to awaken from hibernation in Missouri and Virginia, and are being hotly debated in several other states. Meanwhile Idaho, Iowa, Maryland, and Minnesota continued to grapple with implications of the federal tax-cut bill.  And our What We're Reading section includes coverage of how states are attempting to further public priorities by taxing carbon, online gambling,…

This week was very active for state tax debates. Georgia, Idaho, and Oregon passed bills reacting to the federal tax cut, as Maryland and other states made headway on their own responses. Florida lawmakers sent a harmful "supermajority" constitutional amendment to voters. New Jersey now has two progressive revenue raising proposals on the table (and a need for both). Louisiana ended one special session with talks of yet another. And online sales taxes continued to make news nationally and in Kansas, Nebraska, and Pennsylvania.

Over the next few weeks we will be blogging about what we’re watching in state tax policy during 2018 legislative sessions. And there is no trend more pervasive in states this year than the need to sort through and react to the state-level impact of federal tax changes enacted late last year.

Several states this week are looking at ways to revamp their tax codes in response to the federal tax cut bill, with Georgia, Idaho, Maryland, Nebraska, and Vermont all actively considering proposals. Meanwhile, Connecticut, Louisiana, and Pennsylvania are working on resolving their budget shortfalls. And transportation funding is getting needed attention in Mississippi, Utah, and Wisconsin.

The recently enacted Tax Cuts and Jobs Act (TCJA) has major implications for budgets and taxes in every state, ranging from immediate to long-term, from automatic to optional, from straightforward to indirect, from certain to unknown, and from revenue positive to negative. And every state can expect reduced federal investments in shared public priorities like health care, education, public safety, and basic infrastructure, as well as a reduced federal commitment to reducing economic inequality and slowing the concentration of wealth. This report provides detail that state residents and lawmakers can use to better understand the implications of the TCJA for…

A bipartisan proposal in Congress to eliminate the new $10,000 cap on federal deductions for state and local taxes (SALT) would cost more than $86 billion in 2019 alone and two-thirds of the benefits would go to the richest 1 percent of households. Unfortunately, “work around” proposals in some states to allow their residents to avoid the new federal cap would likely have the same regressive effect on the overall tax code.

These have been dark days for those who care about tax justice and public investments, but with the Winter Solstice this week and many states diving into their legislative sessions in January, longer days (and long work days) are soon to come! Governors and legislators are already proposing or hinting at their 2018 tax and budget plans in Alaska, California, Iowa, Maryland, and Washington. And transportation investments are getting strong support in Missouri, Oregon, and Virginia.

Residents of California and New York pay a large amount of the nation’s federal personal income taxes relative to their share of the population. As illustrated by the table below, the final GOP-Trump tax bill expected to be approved this week would substantially increase the share of total federal personal income taxes (PIT) paid by both states. Connecticut, Maryland, Massachusetts, and New Jersey would also see their share of federal PIT increase.