State Rundown 1/31: Low-Income Families’ Taxes Getting Some Much-Needed Attention

This week was promising for advocates of Earned Income Tax Credits (EITCs) and other tax breaks for workers and their families, which are making headway in Alabama, Maine, Massachusetts, Missouri, Utah, and Wisconsin. The week also saw the unveiling of a tax cut plan in Missouri, a budget-balancing tax increase package in Oklahoma, the end of an unproductive film tax credit in West Virginia, and a very busy week for tax policy in Utah.

— Meg Wiehe, ITEP Deputy Director, @megwiehe

• Missouri Eric Greitens released details of his tax cut proposal this week, calling for cuts to the top personal income tax rate and corporate income tax rate, a nonrefundable EITC, and an assortment of revenue raising measures that he claims will make the package revenue-neutral. But the administration’s numbers are already being questioned within the state.
• The Oklahoma House is expected to vote on a revenue-raising tax reform plan early next month. The Step Up Oklahoma plan includes increases to the state’s cigarette tax, fuel tax, and oil and natural gas gross production tax. It also substantially revises the state’s income tax structure. Oklahoma Policy Institute weighs in here on the proposal.
• In his state of the Commonwealth address, Gov. Charlie Baker stated that as part of his budget plan he will propose expanding Massachusett’s EITC from 23 to 30 percent of the federal credit.
• In Maine, the state’s House Republican leader has introduced legislation that would use the revenue gained from eliminating the state’s personal exemptions (tied to federal cut) to double the state’s EITC to 10 percent of the federal credit and create a state-level Child Tax Credit.
• The Alabama Senate approved a bill to provide low-income families with a small tax cut. Married couples with incomes up to $20,000 can currently take the full value of the state’s $7,500 standard deduction, and the value of the deduction then decreases as income rises. The bill would raise that threshold to $23,000.
• Missouri lawmakers will also consider a stand-alone bill to create a 20 percent state EITC, in addition to Gov. Greitens’s inclusion of a smaller non-refundable version in his tax bill.
• It’s a busy tax time in Utah. Recent estimates show the state could receive a $25-$80 million revenue boost from federal tax reform, though lawmakers are understandably cautious. The state’s Transporation Legislative Task Force is out with 114 pages of ideas for funding infrastructure projects in a time of declining gas tax revenues. The recommendations include increasing registration fees for electric vehicles, imposing transit taxes at the local level, and allowing highway funds to be diverted towards other transportation projects. Good news for the “Our Schools Now Initiative” that is proposing to increase both the sales and personal income tax rates to raise more money for public schools—recently polling shows that 56% of Utahans support the efforts. And the House just passed a bill creating a state EITC for families living in poverty.
• West Virginia lawmakers voted to end the state’s film tax credit following an audit that showed that the credit provided little economic gain. Gov. Jim Justice signed the legislation into law.
• To address an immediate need for transportation revenues, Connecticut lawmakers have proposed an increase to the state’s gas tax. Gov. Dannel Malloy has also called for additional revenue, proposing that the Nutmeg state reinstate high tolls and increase the state’s gas tax by 7 cents per gallon.
• The Florida House and Senate each approved a version of Gov. Rick Scott’s proposal to make it more difficult to raise revenues, with the House version requiring a two-thirds supermajority vote for tax increases and the Senate version requiring three-fifths.
• There are no clear solutions yet to the budget crisis facing lawmakers in Louisiana, but at least negotiations are underway as Republican leadership delivers their list of priorities to the governor.
• Thing are looking up in New Mexico where increasing prices for oil and gas have cleared up the state’s budget crisis after years of cuts. Also in New Mexico tax news, a bill to raise the cigarette tax by $1.50 a pack cleared its first committee, a House committee signed off on a tax break to support “Small Business Saturday,” and one lawmaker wants to remove the $50 million cap on the state’s film tax credit.
• Oregon avoided a major stressor to its budget when voters approved Measure 101 earlier this month, but the state is still going into its 2018 legislative session facing a deficit of around $300 million.
• In his State of the State address last week, Wisconsin Scott Walker introduced a proposal to create a refundable, $100 child tax credit. The idea fell flat among fellow republican lawmakers, and the Gov. has since stated that he is open to the idea of making the credit nonrefundable.
• A Nebraska bill to create an income tax credit for half of school property taxes paid was heavily criticized at a public hearing, with most of the opposition centering on the lack of ideas for how to pay for the $1.1 billion credit.
• Virginia may create a tax exemption for feminine hygiene products, as three separate bills to do so have been filed and have considerable support.

What We’re Reading…

• As Kansas Sam Brownback prepares to leave the state for his newly-confirmed ambassador position, Michael Mazerov at the Center on Budget & Policy Priorities reflects on the failed promises of Brownback’s signature tax policy.
• The Wisconsin Budget Project has the skinny on all the ways the Foxconn tax deal passed by lawmakers last year doesn’t add up for the state. To be specific—more than $1 billion of the promised tax incentives have no direct tie to job creation requirements.
• You’ve heard of soda and sugar taxes, but meat? It may just be the next tax on the plate.
• From Governing, federal tax reform and economic uncertainty are driving 2018 state budget proposals.
• Three states – Connecticut, New Jersey, and New York — are suing the federal government over the recent tax cut bill, arguing it unconstitutionally harms their particular states.

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 [email protected]. Click here to sign up to receive the Rundown via email.

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