Just Taxes Blog by ITEP

State Rundown 11/8: Online Sales Tax Fight and Tax Subsidy Absurdity Go National

State Rundown 11/8: Online Sales Tax Fight and Tax Subsidy Absurdity Go National

November 8, 2017

Meg Wiehe
Meg Wiehe
Deputy Director

Internet sales tax fairness efforts gained momentum this week as most states joined together to encourage the US Supreme Court to allow them to collect taxes on online sales. Meanwhile, Montana lawmakers will enter special session next week to plug their revenue shortfall, Mississippi‘s (self-inflicted) revenue crunch is reaching unprecedented severity, and misguided corporate tax subsidies got mainstream attention from HBO’s John Oliver and Rolling Stone.

— Meg Wiehe, ITEP Deputy Director, @megwiehe

  • The effort to put internet retailers on even footing with brick-and-mortar stores with respect to sales taxes gained momentum this week. Attorneys general from 35 states and DC backed South Dakota‘s case asking the US Supreme Court to reconsider an old ruling and finally allow states to enforce their sales tax laws on online sales, and 37 tax professors signed onto a brief also supporting the effort. States are also trying to get Amazon, which now collects sales taxes on its own direct sales, to collect those taxes when selling items on behalf of third-party sellers.
  • Montana lawmakers have been called into special session starting next week to address a projected $227 million budget shortfall. The governor has been working with lawmakers to try to offset cuts with some temporary revenue increases—though many lawmakers remain skeptical that something can be worked out.
  • Pennsylvania voters approved a constitutional amendment Tuesday that will allow the legislature to allow local jurisdictions to exempt residents from property taxes on their primary homes, but with few other revenue options available, the amendment may not lead to actual property tax changes, at least not without further legislation.
  • Mississippi is in the midst of an unprecedented negative revenue trend, projected to see year-over-year declines in three out of four years from FY16 to FY19, without even accounting for inflation or the state’s growing population and needs.
  • Signatures have been submitted to put a number of questions before South Dakota voters in 2018, including legalizing and taxing medical marijuana and charging an additional $1 per pack of cigarettes to be devoted to the state’s technical institutes. Measures relating to independent redistricting, open primaries, and mail-in elections appear to have gained enough signatures as well.
  • Compared to his previous attempts, Florida Rick Scott’s annual tax cut proposal is relatively small in his final year before term limits end his governorship. This year’s package is based on reducing drivers’ license fees and new and expanded sales tax holidays. A lawmaker has already introduced a bill to implement one of these cuts, expanding and extending the back-to-school sales tax holiday. Meanwhile Gov. Scott’s misguided proposal to amend the state’s constitution to require a supermajority for any tax increases was advanced by a House committee.
  • Even though Maine voters chose last year to legalize and tax recreational marijuana, Gov. Paul LePage vetoed the bill last week.
  • Kansas consensus revenues figures show the state collecting over $200 million more than previously projected over the next two years, which is good news for a strained budget but unlikely to satisfy the looming state education funding mandate.
  • Tennessee is not adequately tracking its own business tax credits, according to a recently completed audit of the programs. And in California, the state Legislative Analyst’s Office recommends ending a tax credit program intended to attract or retain business investment..

What We’re Reading…

  • HBO’s Last Week Tonight with John Oliver delved into the absurd side of business tax subsidies like those recently offered by many states and cities to Amazon for its planned headquarters project. You can watch the segment on YouTube or read about it in Rolling Stone.
  • Route Fifty reports on efforts to create a new benefits system for “gig economy” workers like Uber and Lyft drivers who are not currently able to get health insurance or retirement benefits. The proposal would change a small fee on gig economy transactions that would go toward portable benefits packages for these workers.
  • Governing reports on the surprising inclusion in the House tax bill of a measure to eliminate tax-exempt municipal bonds, which if enacted would increase the cost of financing projects like low-income housing, hospitals, and airports..

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.