January 7, 2021
January 7, 2021
Though most people’s attention is rightly focused on events unfolding in the nation’s capital this week, state legislative debates are also underway or soon to begin in many states, including proposals to tax the rich in New York and Rhode Island, provide a boost to low-income families in California, and legalize and tax cannabis in Missouri and Rhode Island.
Major State Tax Proposals and Developments
- CALIFORNIA Gov. Gavin Newsom has proposed a $4 billion plan to help the state and its residents recover from the pandemic-driven downturn as part of his overall budget proposal. The plan includes a $600 boost to each California family qualifying for the Earned Income Tax Credit (EITC), $1.5 billion to promote electric car purchases and infrastructure, $575 million added to an existing small business grant program, $100 million to extend a tax credit for small business owners who bring back laid-off workers, and $430 million for other business tax subsidies, among other provisions. – DYLAN GRUNDMAN O’NEILL
- IOWA Gov. Kim Reynolds has announced she’ll pause for one year her plan to shift taxes off of high-income households and onto low- and middle-income families by using a sales tax increase to cut income taxes. – DYLAN GRUNDMAN O’NEILL
- A CONNECTICUT coalition called the “People’s Recovery” is pushing lawmakers to embrace taxing millionaires and highly profitable corporations to improve tax equity and funding for shared priorities.
- IDAHO Democrats released three proposals to address rising property taxes that include tying residential property tax exemptions to the performance of each counties housing market, boosting the state circuit breaker, and eliminating an exemption for businesses that spend more than $1 billion on new facilities.
- MISSISSIPPI’s Gov. Tate Reeves is expected to ask legislators to phase out the state’s personal income tax this session. Given that the personal income tax stream makes up nearly one-third of the state’s general fund, lawmakers will need to weigh the benefits of public investment versus their commitment to a debunked theory of trickledown economics.
- MISSOURI lawmakers will attempt to legalize and tax recreational cannabis this year.
- As he took the oath of office, MONTANA Gov. Greg Gianforte vowed to make cutting taxes a central part of his legislative priorities.
- After a year of mostly solid tax policy choices that included enacting a millionaires tax, improving the state EITC, and scrutinizing corrupt business tax subsidies, NEW JERSEY legislators and Gov. Phil Murphy surprised many in the state by supporting and quickly adopting a massive new business tax subsidy program set to cost as much as $14 billion over six years.
- NORTH DAKOTA‘s Association of Tribal Colleges released a study on Native American tax contributions and found that the estimate of 2019 state personal income taxes paid was almost $50 million or $908 for every Native American man, woman, and child.
- PUERTO RICO Gov. Wanda Vazquez Garced signed SB 1534 into law, which will authorize sports betting, remote betting, and eSports. There will be a 7 percent tax on gross gaming revenue on land-based betting, a 12 percent tax on online betting, and a tax equal to 12 percent of entry fees for fantasy sports.
- Senate leaders in RHODE ISLAND have come out in support of a tax increase on the state’s high-income earners, cannabis legalization, and a multi-year minimum wage increase.
What We’re Reading
- A new coalition in New York is making a bold call for progressive tax policies to eventually raise $50 billion per year for state needs, most of which pre-date the Covid-19 pandemic. To do so, they propose making the existing income tax more progressive, replacing the estate tax with an inheritance tax, and instituting taxes on capital gains, large fortunes, and the financial sector. Read their full report here.
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