Just Taxes Blog by ITEP

State Rundown 4/7: Tax Justice Advocates Applaud New York Budget Deal

April 7, 2021

.ITEP Staff

New York lawmakers stole the spotlight this week as they were able to agree on—and convince reluctant Gov. Andrew Cuomo to support—strong progressive tax increases on the highest-income households and corporations in the state to fund shared priorities like K-12 education and pandemic recovery efforts. Minnesota leaders are attempting a similar performance off Broadway with progressive reforms of their own, while Kansas legislators are getting poor reviews for cutting a number of taxes and worsening their budget situation. Thankfully major tax changes stayed backstage as sessions concluded in Georgia and Mississippi.

Major State Tax Proposals and Developments

  • GEORGIA lawmakers concluded a busy legislative session last week after intense debate over different tax credit and exemption proposals. Ultimately, the state passed an omnibus bill that allows for a limited number of economic analyses each year on proposed tax laws, extends certain sales tax exemptions, and adds new, unnecessary job tax credits. Lawmakers also passed on an opportunity to create a Tax Reform Committee to evaluate the state’s special-interest tax breaks. Legislators also slightly increased the standard deduction, but it remains unclear whether this will cause Georgia to forfeit some federal aid. – KAMOLIKA DAS
  • KANSAS lawmakers passed a $130 million tax cut package that includes tax breaks for multinational corporations, modestly increases the standard deduction, allows people to itemize on their state returns even if they don’t on their federal returns, and allows businesses to deduct expenses involving Paycheck Protection Program loans. The tax cuts are partially offset by a new online sales tax but the state will still face a large revenue loss. – KAMOLIKA DAS
  • NEW YORK legislators and Gov. Andrew Cuomo reached a final budget deal this week, which includes temporary highly progressive income tax increases on about 50,000 of the state’s richest households. Income between $1.1 million ($2.2 million for married couples) and $5 million will be taxed at 9.65 percent (up from the current 8.82 percent), the next $20 million at 10.3 percent, and income over $25 million at 10.9 percent. Business profits over $5 million will also see a 0.75-point increase, and mobile sports betting will be allowed and taxed. The budget prioritizes investments in K-12 education and relief for residents and small businesses. – DYLAN GRUNDMAN O’NEILL

State Roundup

  • The ARKANSAS House of Representatives passed a state income tax credit for a stillborn child; the bill is being reviewed by the Senate. Lawmakers are also considering a new tax-cut proposal for teachers and a sales tax on social media advertising.
  • The FLORIDA Senate approved an online sales tax bill that should bring in $1 billion in new revenue; however, instead of using this revenue to benefit the public, it will be used to reduce unemployment taxes paid by businesses and commercial rent taxes.
  • A new poll in MAINE found that two-thirds of Mainers support taxing the wealthy through a new state tax bracket that would increase taxes on those making more than $200,000 a year.
  • House Democrats in MINNESOTA released their tax plan, which similarly mirrors the governor’s recent calls for increasing taxes on wealthy residents and corporations. The plan would impose an 11.15% top rate on single filers earning over $500,000 and tax companies with profits abroad.
  • MISSISSIPPI’s tumultuous session came to an end late last week. While major tax changes were on the table – including elimination of the state’s income tax and sales tax hikes resulting in a major tax shift to benefit the wealthy – they did not make it past the state Senate.
  • Republicans in the MONTANA Senate have advanced a bill that would condense the state’s seven income tax brackets to two.
  • The NEW HAMPSHIRE House of Representatives is considering a slew of tax cuts before voting on the state budget including cuts to the Business Enterprise Tax and the Business Profits Tax, as well as a $100 million cut in the statewide property tax that supports education.
  • NEW MEXICO Gov. Michelle Lujan Grisham signed into law a bill that expands the eligibility for rebates and the Working Families Credit.
  • WASHINGTON lawmakers are considering creating a healthcare commission to develop a plan for publicly funded universal health care by 2026.
  • WEST VIRGINIA’s Gov. Jim Justice released his second tax plan this session. His plan would, among other things, eliminate the state’s income tax, cut business taxes, increase the sales tax, and adjust taxes on coal, soft drinks, tobacco and the lottery. The state Senate has yet to vote on their version of the bill.
  • WYOMING has legalized sports betting with the governor’s signing of HB 133. A ten percent tax will be imposed on gaming revenues.

What We’re Reading

  • The Nation describes how the US became the second largest tax haven in the world.
  • A group of thirteen public policy organizations led by Good Jobs First signed onto a letter encouraging the US Treasury department to disallow local jurisdictions from using federal American Rescue Plan aid to hand out wasteful business tax subsidies.
  • A Pew State Fiscal Health project analysis shows almost half of states are expecting lower revenues in fiscal years 2019-20 and 2020-21 than in 2018-19.
  • Governing explores the opportunities and ongoing challenges states face regarding shoring up their unemployment insurance systems.
  • The New York Times editorial board writes that “flat-rate property taxation is a sham,” showing how lower-value homes are much more likely to be over-assessed, amounting to tax breaks for wealthy homeowners and higher taxes on middle- and low-income households.
  • We published a blog at Inequality.org explaining how sales taxes are particularly harmful to racial equity and how states can implement better alternatives.

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