February 27, 2020
February 27, 2020
This weekend’s Leap Day should be a welcome extra day for state lawmakers, advocates, and observers who care about tax and budget policy, as there is an overflow of proposals and information to digest. Most importantly, as emphasized in our “What We’re Reading” section, there are never enough days in a month to do justice to the importance of Black History Month and Black Futures Month. In state-specific debates, Oregon and Washington leaders are hoping to take a leap forward in raising funds for homelessness and housing affordability measures. Lawmakers in West Virginia and Wisconsin could use a day to return to the drawing board on recently rejected tax cut proposals. New Jersey and Rhode Island leaders have proposed forward-thinking progressive income tax measures. And lawmakers continue to work overtime on needed gas tax updates in Arizona, Massachusetts, and Utah.
— MEG WIEHE, ITEP Deputy Director, @megwiehe
Major State Tax Proposals and Developments
- The WEST VIRGINIA Senate rejected the proposed tax overhaul that would have phased out business property taxes and offset these losses by increasing tobacco and consumer sales taxes. The Senate passed the first part of the plan on Monday, but the plan was contingent on a constitutional amendment that the Senate rejected earlier in the week. — KAMOLIKA DAS
- The FLORIDA House Ways & Means Committee approved a wide-ranging tax package that includes sales tax breaks before back-to-school and hurricane season, reduced state aviation fuel taxes for commercial air carriers, cuts to the communications service tax, and reduced taxes on commercial leases, among other changes. — KAMOLIKA DAS
- WISCONSIN Gov. Tony Evers vetoed a tax cut bill supported by Republicans, and remained committed to his plan of investing in schools and reducing property taxes through the school aid formula. — MARCO GUZMAN
Governors’ Budget Proposals and State of the State Speeches
- NEW JERSEY Gov. Phil Murphy presented his budget proposal this week, calling for increased investments in education, transportation, health care, and reducing property taxes and pension debt, as well as enhancing the Earned Income Tax Credit (EITC) for low-income workers. On the revenue side of the ledger, he called for tax increases on tobacco, opioid manufacturers, guns, and ammunition. Most notably, Gov. Murphy and Senate President Steve Sweeney may finally be on the same page regarding a millionaires’ tax, with Sweeney announcing he can support one if Murphy can increase his planned pension payment by another $1 billion (reining in the state’s $1 billion worth of business tax subsidies should help with that).
- No more addresses are scheduled in February. Governors of LOUISIANA and OHIO are scheduled to address their states in March.
- ALASKA’s Gov. Dunleavy proposed a fully funded Permanent Fund dividend for Alaska residents in his budget plan without offering a credible plan for funding it. Lawmakers and advocates are working to identify sustainable revenue options to fill the state’s $1.5 billion deficit.
- In ALABAMA, legislators continue to consider bills that will eliminate the state sales tax on groceries. The Senate bill would offset the reduction in revenue by amending the state income tax, while the House bill would phase out the state sales and use tax on groceries over twenty years without any changes to the state income tax.
- Lawmakers in ARIZONA have proposed a bill that would increase the state’s gas tax over 3 years to thirty-six cents per gallon to fund transportation needs across the state.
- Also, the ARIZONA Senate rejected a plan that would have exempted military pension benefits from state income tax after Senate Democrats were joined by four Republicans in opposing the proposal.
- The GEORGIA Senate unanimously voted to support truth-in-tax-breaks legislation. SB 302 would allow the chairmen of the House and Senate tax committees to request third-party economic impact reviews of select tax breaks each year.
- In HAWAII, lawmakers are moving legislation to increase the state’s minimum wage, make the EITC refundable and permanent, and increase and amend the refundable food/excise tax credit. Proposals for a car rental tax and eliminating the tax break for Real Estate Invesment Trusts (REITs) are also being revisited.
- Lawmakers in IOWA are doubting they’ll be able to iron out the many problems with Gov. Kim Reynolds’s proposal to fund an income tax cut for high-income households with a sales tax increase largely paid by low- and middle-income families.
- The KANSAS Senate approved a bill that would add additional prerequisites before cities and counties could raise property taxes above a certain threshold.
- In LOUISIANA, the Board of Commerce and Industry amended the rules of the controversial Industrial Tax Exemption Program (ITEP), business tax subsidy. The new rules shift decision-making power away from local governments and toward businesses by allowing businesses that are denied tax breaks to appeal the decision to the Board of Commerce and Industry.
- MASSACHUSETTS House leaders proposed a transportation funding package yesterday that includes a 5-cent gas tax increase, 9-cent increase on diesel, a fee hike on ride-hailing services, and an end to the state’s sales tax exemption for purchases of vehicles by rental car companies. It would also increase the state’s corporate minimum tax.
- In an effort to collect additional revenue from out-of-state visitors, commissioners in MONTANA’s second largest county, Missoula, are considering a June 2 ballot initiative that would impose a 2-cent per gallon gas tax.
- NEBRASKA’s property tax and school funding debate is stalled as proponents of the Revenue Committee’s approved package try to overcome objections from school districts and urban Senators.
- A proposal to raise $250 million annually for housing and homelessness services in the Portland, OREGON, area has been tweaked and placed on the ballot to go before voters on May 19. The revised proposal includes both a 1 percent tax on high-income households and a 1 percent tax on business profits over $5 million.
- In RHODE ISLAND, lawmakers have proposed adding one percentage point to the 5.99 percent top rate for earnings over $500,000. The revenue raised would fund K-12 education in the Ocean State.
- A bill is moving forward in the TENNESSEE House of Representatives that would lower the business income tax (excise tax) from 6.5 percent to 6 percent over five years with certain caveats to reverse course if the state’s revenue growth slows beyond a certain threshold.
- The TENNESSEE Senate is considering a bill that would explicitly require transactions between marketplace facilitators and sellers to be taxed. The legislation would not apply to marketplace facilitators that have sales that total less than $500,000 annually in the state.
- A bill to regulate and tax cannabis sales for adults 21 and older passed out of VERMONT’s House Appropriations Committee and is expected to move to the House floor for a vote later this week.
- The UTAH state auditor suggested that the state may need an alternative to the gas tax to pay for transportation needs, noting that vehicles with increased fuel efficiency and a move toward alternative fuels has led to the gas tax collecting less per mile driven each year.
- The VIRGINIA House’s Finance Committee advanced legislation that would extend the motion picture tax credit from 2022 to 2025. Companies could receive a tax credit up to 20 percent of qualifying expenses if production is in an economically distressed part of the state.
- The Boeing corporation has asked WASHINGTON state lawmakers to suspend its preferential tax rate so it can avoid penalties resulting from the World Trade Organization identifying the break as a protectionist violation of international trade agreements. Doing so will create a $363 million revenue windfall over the next few years, which happens to be enough to fund Gov. Jay Inslee’s plan to reduce homelessness.
What We’re Reading
- Inequality.org explores the intertwined patterns of national and global inequality, which necessarily start with a deep look at the history of slavery and racism, while also intersecting with gendered inequities and tensions between capital and labor.
- The Boston Review highlights Coretta Scott King’s efforts to advance a federal jobs guarantee and a guaranteed annual income. Stein writes, “Scott King saw economic precarity as not just a side effect of racial subjugation, but as central to its functioning.”
- Governing reports that the amount states and cities spend on tax breaks to attract companies has tripled since the 1990s, despite the fact that attracting specific companies does not significantly boost the broader local economy.
- Route Fifty dives into some of the problems states will face as the population continues to age.
- Stateline reviews efforts in states including MARYLAND and NEBRASKA to tax online advertisements.
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