March 11, 2020
March 11, 2020
With all eyes on the potential effects of the oil price war and COVID-19 coronavirus on lives, communities, and economies, Georgia House lawmakers this week crammed through a regressive and costly tax cut for the rich with essentially no debate, information, or transparency. Most states are proceeding much more responsibly, assessing the ramifications for their service provision needs and revenues to fund those needs. The threats have heightened attention, for example, on Alaska’s dependence on the oil industry and New Jersey’s need for progressive tax revenues. Lawmakers in other states continued to monitor the situation while carrying on debates over gas taxes and transportation funding in Kentucky, Massachusetts, Michigan, and Virginia, and over school finance in Louisiana, Maryland, and Nebraska.
Major State Tax Proposals and Developments
- GEORGIA House lawmakers waived their normal rules and amended a routine federal tax code conformity bill in order to rush through a proposal to flatten the state’s graduated six-bracket income tax system into a single 5.375% rate (the current top rate is 5.75%) before their constituents could learn about its effects. Despite the inclusion of a modest nonrefundable tax credit for low- and middle-income taxpayers and elimination of the “double deduction” of state income taxes, those effects amount to hundreds of millions of dollars in tax cuts given almost entirely to the state’s highest-income households. What is more, they propose to slash a planned teacher pay raise in half to help pay for it. — KAMOLIKA DAS
Governors’ Budget Proposals and State of the State Speeches
- Gov. John Bel Edwards of LOUISIANA called for improved education investments in his annual address this week.
- Governors of MINNESOTA and OHIO are scheduled to address their states later in March.
- Plunging oil may result in an even larger than projected revenue shortfall in ALASKA. The price-war driven oil price drop, if long-term, will have major implications for the state’s budget and tax policies.
- The FLORIDA House advanced a $193 million tax break package and maintained a $543 million refund for corporations that will primarily benefit commercial airline and rental car companies, among other industries. The wide-ranging bill also cuts the communications services tax and creates tax holidays for back-to-school and disaster preparedness.
- The KANSAS House Taxation Committee is considering a $53 million bill that would create a modest refundable tax credit for certain food purchases. Single taxpayers earning up to $30,000 would receive a $60 tax credit while married couples earning up to $40,000 would receive $240.
- The KENTUCKY House passed a budget with a vaping tax and an increase to the state’s tobacco tax. Sports betting and a local tax bill did not make the cut. Meanwhile, advocates for better transportation infrastructure—including industry groups—urged lawmakers to raise the state’s gas tax.
- After a sales tax expansion failed in MARYLAND, the House Ways and Means Committee is considering a revenue package to cover the state’s education reforms. The package includes taxing digital downloads, eliminating loopholes that allow multistate corporations to avoid taxes, and increasing the tobacco tax, among other provisions.
- Lawmakers in the MASSACHUSETTS House passed a transportation tax bill that includes increases to the state’s motor fuel taxes (by 5 cents per gallon on gasoline and 9 cents per gallon on diesel), taxing ride-hailing services, vehicle purchases by rental car companies, and the state’s corporate minimum tax. The legislation now moves to the Senate, and Gov. Charlie Baker has already weighed in.
- Republican lawmakers in MICHIGAN offered their plan to help fix roads, which includes shifting to a dedicated, 6-cent gas tax, that would raise approximately $855 million a year.
- NEBRASKA’s Revenue Committee has advanced a new iteration of their attempt to reduce property taxes through school finance changes, but it is considered a longshot to overcome opposition from school advocates.
- Some in NEW JERSEY are pointing to COVID-19’s potential effects on health care funding needs and tax revenues as further reasons to enact a millionaires tax such as the one promoted by Gov. Phil Murphy.
- The SOUTH CAROLINA House is set to finalize the state’s general fund spending plan, which includes $128 million for a one-time, $100 tax credit for every tax return with at least $100 in income tax liability.
- UTAH lawmakers are pushing forward two bills that would amend the state constitution and allow income tax revenues to be used to support services for children and people with disabilities. If approved, the measures would be subject to a public vote on the November ballot.
- Additionally, members of UTAH‘s House Revenue and Taxation Committee approved of a bill that would expand tax credits for Social Security recipients.
- Lawmakers in VERMONT are considering a package of tax credits and economic development incentives pitched by Gov. Phil Scott. They are also revisiting a military pension tax break.
- VIRGINIA lawmakers approved a transportation funding deal that includes raising the state gas tax by 10 cents over two years and then indexing it to inflation. The deal would also increase the real estate transfer tax and the hotel tax in Northern Virginia.
- WASHINGTON state lawmakers have sent a menstrual products sales tax exemption bill and a deal for sales tax revenue sharing with the Tulalip Tribe to Gov. Jay Inslee’s desk, and are reportedly still working on a potential carbon tax.
- The governor of WYOMING signed a bill into law that would create a 5 percent statewide lodging tax.
What We’re Reading
- In a recent op-ed, the chair of Patriotic Millionaires makes the case for the rich to pay their fair share in New York.
- Darrick Hamilton and Kyle Strickland write about how strategic racism has helped to create false narratives around the “deserving” and “undeserving” poor and to concentrate economic and political power at the top.
- Janelle Jones of the Groundwork Collaborative writes about how the coronavirus has revealed hard truths about the state of the American economy.
- In other coverage of the COVID-19 pandemic, Stateline reports on states’ powers to fight the virus, Route Fifty covers the effects of quarantines so far and how states are managing with already depleted public health systems, and Governing weighs in on how the virus intersects with debates over paid sick leave.
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