Just Taxes Blog by ITEP

State Rundown 11/23: Thankful for Tax Advocates Like You!

State Rundown 11/23: Thankful for Tax Advocates Like You!

November 23, 2021

ITEP
.ITEP Staff

Here at ITEP we want to give thanks and say we’re grateful for all of the hard work that advocates in states across the country are doing to secure progressive tax policy victories. Like in Arizona, where supporters of an income tax surcharge on wealthy residents were able to collect enough signatures to force a veto referendum on legislation recently signed by the governor that would implement a 2.5 percent flat tax. In the Sunshine State, meanwhile, cities are pushing back on a law that gives the Florida governor and the administration veto power over local budgets and tax revenue. And advocates in Ohio are hard at work, showing how unfair severance taxes have cost the state over $1 billion.

Major State Tax Proposals and Developments

  • ARIZONA‘s secretary of state announced that enough signatures have been collected to initiate a veto referendum to overturn an income tax bill that would reduce rates and ultimately create a flat rate of 2.5 percent. Though the veto referendum is expected to be on the November 2022 ballot, it will have to overcome several challenges in court. — MARCO GUZMAN
  • State officials have confirmed that an income tax rate cut will appear on COLORADO‘s November 2022 ballot. The proposal would cut the state’s flat 4.55 percent rate to 4.4 percent. — MARCO GUZMAN
  • LOUISIANA voters approved a tax swap that would rid the state of its federal income tax deduction and use it to lower income tax rates. The constitutional amendment also reduces the maximum income tax rate allowed in the state constitution from 6 to 4.75 percent. Voters also rejected centralizing sales tax collections. — NEVA BUTKUS

State Roundup

  • CALIFORNIA’s progressive tax structure and robust economic recovery are now projected to generate a $31 billion budget surplus for fiscal year 2021-2022. Only about half of that can go into reserves, so Gov. Gavin Newsom and lawmakers could use the rest for some mix of new investments, tax cuts, and tax rebates.
  • The DISTRICT OF COLUMBIA held a hearing on legalizing the sale of recreational marijuana last Friday. The proposed bill would require that half the cannabis tax revenue would be used to automatically expunge cannabis-related arrests and convictions and provide employment opportunities for residents arrested for drug offenses.
  • Seven FLORIDA cities filed a lawsuit last Tuesday challenging a law that gives the governor and cabinet veto power over local budgets and tax dollars. The lawsuit states that this overstep could result in fiscal constraints that ultimately cost taxpayers more money. In other news, Gov. Ron DeSantis called on the legislature to suspend the gas tax for six months which would cost the state $1 billion.
  • ILLINOIS Gov. JB Pritzker has signed the Reimagining Electric Vehicles in Illinois Act which provides extensive tax credits for electric vehicle and auto battery production companies.
  • The MARYLAND Dept. of Commerce introduced a new tax credit, the Maryland Innovation Investment Tax Credit, to supposedly support state tech start-ups although decades-old research has shown that states fare better when they invest in existing employers.
  • MISSISSIPPI Gov. Tate Reeves reasserted his plan to eliminate the personal income tax even though the plan would leave the state with roughly the same amount of revenue it was collecting before 2010. Inexplicably, Gov. Reeves also plans to spend more on education, including a $71 million teacher pay increase, though it is unclear how the state would pay for these investments.
  • As NEBRASKA lawmakers prepare for another year of trying to balance the needs of rural and urban school districts, one mid-size town’s representative is hoping she has found the sweet spot with a plan to boost state aid through a combination of per-pupil funding and income tax redirection. Supporters are already waffling, however, on how to fund the proposal, and Gov. Pete Ricketts is sure to oppose increased funding from any source.
  • NEW MEXICO Gov. Michelle Lujan Grisham announced that one of her main legislative priorities for 2022 will be to cut the state gross receipts tax rate from 5.125 percent to 4.875 percent.
  • UTAH lawmakers have begun exploring how they intend to use the almost $615 million surplus in the 2022 legislative session. Ideas range from eliminating sales tax on groceries to cutting income taxes, addressing infrastructure needs, and increasing teacher salaries.

What We’re Reading

  • The Massachusetts Budget & Policy Center highlights several progressive tax policies that can help small businesses.
  • A new report by the Tax Policy Center calls on public finance economists to center racial equity in their research.
  • Route Fifty reports on a new trend of state and local parks and recreation departments expanding their understanding of “recreation” to include e-sports, as a growing number of localities are now hosting online video game tournaments for residents.
  • Commentary by Policy Matters Ohio in the Ohio Capital Journal demonstrates how Ohio has lost out on $1.2 billion due to unfair severance taxes that favor the energy companies.
  • A contributor to the Sacramento Bee compares the California Lottery to the predatory payday loan industry and argues it should be shut down.

 

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