Just Taxes Blog by ITEP

State Rundown 11/27: Don’t Forget to Thank Taxes!

State Rundown 11/27: Don’t Forget to Thank Taxes!

November 27, 2019

Meg Wiehe
Meg Wiehe
Deputy Director

In the last few weeks, Florida Gov. Ron DeSantis has served up his budget proposal, which advocates are eager to dig into and hoping to contribute to with a delectable Earned Income Tax Credit proposal of their own. Utah lawmakers have been cooking up tax ideas as well, but haven’t yet decided when to come to the table to debate them. And Maryland leaders finalized their menu of needed education reforms, now moving on to assigning responsibilities for funding them. With respect to dividing up the pie, our “What We’re Reading” section below includes reporting on evidence that corporate tax subsidies contribute to inequality at both the federal and state levels. We at ITEP are very thankful for your readership, support, and encouragement!

— MEG WIEHE, ITEP Deputy Director, @megwiehe

Major State Tax Proposals and Developments

  • FLORIDA Gov. Ron DeSantis recently released his initial budget proposal, and many in the state were pleasantly surprised to see substantially increased education investments in the proposal. It wouldn’t be a Florida budget debate without yet another round of misguided sales tax holiday proposals, but an effort to help low- and middle-income working families through a Florida version of the federal Earned Income Tax Credit (EITC) is garnering an encouraging amount of interest as well, getting its first ever hearing. — DYLAN GRUNDMAN
  • UTAH lawmakers who’ve worked on a tax reform proposal throughout the summer and fall of 2019 were hopeful to move legislation during a special session in early December, but consensus on legislative recommendations has yet to be reached among the task force members. Many public questions, concerns, and complaints were aired during a public hearing held this past Monday. A follow-up hearing is scheduled for December 9. — LISA CHRISTENSEN GEE
  • MARYLAND’s “Kirwan Commission,” a large group of policymakers and staff that has been studying education policy and funding in the state, has held its final meeting and approved a bold set of reforms to improve education outcomes and equity. The reforms received strong support from the commission and the public, and lawmakers will turn in January to debating and enacting them—and funding them. Some are suggesting that the legislature piece together many small revenue increases as the proposal ramps up over ten years, while others are acknowledging that the state needs strong progressive tax reforms now to ensure the revenue comes in and improves the state’s upside-down tax code. — DYLAN GRUNDMAN

State Roundup

  • ALASKA communities continue to coordinate online sales tax collection. The state’s Municipal League is finalizing a plan to standardize sales tax collection from online retailers who do business throughout the state. In MAINE, the revenue gain from taxing online sales has helped the state reach its current surplus of $30 million.
  • CALIFORNIA’s budget is in good shape headed into the new year, with a recent report showing $7 billion surplus. Also in California, news that the state will be raising tax rates on recreational cannabis in 2020 is making waves.
  • Defeat of Prop CC in COLORADO does not mark the final fate of the Taxpayer Bill of Rights (TABOR) as proponents are gearing up for an even larger reform effort in 2020 and beyond. Also, teachers in the state are looking to close corporate tax breaks in order to better fund education according to a new report released this month.
  • The DISTRICT OF COLUMBIA, which recently passed a sales tax on soda but is attempting to replace it with a better-designed excise tax, will have a well-funded campaign from the soda industry to contend with.
  • Lawmakers in MASSACHUSETTS have passed legislation to place a seventy-five percent excise tax on vaping products, levied on the wholesale price of e-cigarettes. The bill, which now moves to Gov. Charlie Baker, would also ban flavored tobacco products.
  • MICHIGAN is unlikely to reach a budget deal any time soon as power struggles continue to play out between the republican controlled legislature and democratic governor.
  • Oil production in NEW MEXICO is at record highs, resulting in record surpluses for the state over the last two years. However, the need to diversify the state’s economy away from such high reliance on oil and gas revenues remains high as lawmakers prepare for the 2020 legislative session.
  • NORTH CAROLINA’s Gov. Roy Cooper signed a bill earlier this month that increases the state’s standard deduction and requires Amazon and other online retailers to charge sales tax on third-party transactions. Cooper vetoed the business tax cut that would have rolled back the state’s franchise tax.
  • As drivers shift to electric vehicles that don’t incur gas taxes, OREGON is shifting to higher vehicle registration fees and other means of generating revenue for roads and other infrastructure.
  • In WEST VIRGINIA, state agencies are preparing for a total of $100 million in mid-year spending cuts. State revenue loss, driven by low natural gas and coal prices, are contributing to a $33 million revenue shortfall.

What We’re Reading

  • The New York Times Editorial Board weighs in on the federal Opportunity Zone program and its potential to help—billionaires.
  • Michael Mazerov at the Center on Budget and Policy Priorities has a new commentary on the ways in which federal and state laws help corporations avoid paying income taxes.
  • Similarly, Route Fifty notes that corporate tax incentives contribute to inequality in states by mostly benefiting wealthy business owners while draining revenues away from broader public investments.
  • Route Fifty also reports on the growing awareness that the solvency of cities depends on the financial health of their residents, and how cities are seeking to improve on both of those fronts by “starting to build financial inclusion efforts into a systematic and system-wide approach, rather than a program here and a program there.”
  • A new study out from the of the Northwest Economic Research Center at Portland State University explores how a Land Value Tax (LVT), also known as a split-rate tax, would play out in Multnoma County, OREGON. The results suggest that changing to this system would significantly improve the fairness of the county’s property tax system.
  • The CALIFORNIA Budget and Policy Center has a new report outlining reasons why the state should include immigrant families and communities in the CalEITC and Young Child Credit.

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.