May 11, 2022
May 11, 2022
As 2022 inches closer to its midpoint, important tax policy decisions are being put in the hands of voters, as special elections and the primary season begin. In June, South Dakota residents will decide on a constitutional amendment that would make it more difficult to enact tax and spending increases via the ballot process. Moreover, Texas voters already approved two property tax-related constitutional amendments that will limit taxes for schools and increase the homestead exemption. And in Colorado, lawmakers were quick to pass a bill in the final days of the session that will cut property taxes and head-off a proposed November ballot measure that would give voters the option to impose a stricter cap on property tax increases.
Major State Tax Proposals and Developments
- Gov. Laura Kelly has signed a bill to phase out sales taxes on groceries in KANSAS starting in 2023. The legislation came to her desk after months of negotiations with Republican lawmakers who pushed back against Gov. Kelly’s proposal to eliminate the 6.5 percent tax in entirety this year. – NEVA BUTKUS
- A COLORADO bill that will cap property tax values for the 2023 and 2024 tax years has passed through both chambers of the General Assembly and is expected to be signed by Gov. Jared Polis. The bill, which was approved within the final days of the session, was intended to head-off a proposed ballot measure that would place a strict cap on property tax increases. – MARCO GUZMAN
- IDAHO Gov. Brad Little has promised to push for more tax cuts following the April revenue report, which came in almost double the amount expected. The goal stands in stark contrast to a measure expected to be on the November ballot that will create a new top rate for wealthy residents and increase the corporate income tax rate. – MARCO GUZMAN
- As the June 7 primary election approaches, SOUTH DAKOTA residents will be able to weigh in on Constitutional Amendment C, a ballot measure that will require any future ballot measures that increase taxes or spend $10 million over five years to pass by 60 percent of the vote. – MARCO GUZMAN
- On May 7, TEXAS voters elected to pass two constitutional amendments aimed at curbing rising property taxes. The first amendment will limit ad valorem taxes for schools and the second increases the homestead exemption from $25,000 to $40,000. – BRAKEYSHIA SAMMS
- The ALASKA House passed a bill that would suspend the motor fuels tax until mid-2023. The bill now heads to the Senate.
- CALIFORNIA’s latest budget forecast projects a surplus of as much as $68 billion. Their legislative session extends to August but passed a key deadline at the end of April that narrows the list of bills under consideration. For example, an ambitious proposal to tax fortunes totaling more than $50 million is officially off the table, as is an effort to suspend an upcoming gas tax increase. Among the many ideas still being considered, one group of senators is proposing to send $200 payments to residents with incomes below $125,000 ($250,000 for couples) while also boosting funding for low-income supports.
- The CONNECTICUT budget was passed and signed as expected, including an extended gas tax holiday, enhanced property tax credit, temporary new Child Tax Credit and increased Earned Income Tax Credit (EITC). Unfortunately, the package did not include funding for the groundbreaking ‘baby bonds’ program enacted last year.
- The DISTRICT OF COLUMBIA Council approved an expansion of the DC earned income tax credit (DCEITC) to include income-eligible undocumented immigrants; this is a welcome and significant development, but advocates have pointed out that it does not replace the need for cash assistance for workers excluded from unemployment assistance.
- FLORIDA Gov. Ron DeSantis approved a bill that creates 10 sales tax holidays starting this month.
- House members in LOUISIANA have approved a bill to phase out a temporary .45 percentage point increase to the state’s sales tax. The temporary tax would sunset in 2025 and generate $420 million annually.
- The MASSACHUSETTS Senate left tax cuts out of its nearly $50 billion fiscal 2023 budget, but leaders promised to debate tax cuts proposals in the near future, with the focus being on providing benefits to working families.
- The Republican controlled MINNESOTA Senate continues to push for their $8.64 billion tax cut package that would cut the bottom income tax bracket and exempt social security benefits from income tax. The Democrat controlled House has passed their $3.25 billion alternative plan which provides more targeted tax credits for children, childcare and housing.
- After defending the state’s abortion ‘trigger law’, MISSISSIPPI Gov. Tate Reeves authorized a $3.5 million tax credit for individuals and businesses that donate to pregnancy ‘resource centers’ that provide alternatives to abortion services.
- MISSOURI Senators have proposed a rebate plan that would send $500 to individuals and $1,000 to couples with income caps of $150,000 and $300,000, respectively. Missouri’s House has already passed a more costly rebate that has no income cap.
- The NEW HAMPSHIRE Senate voted to lower the business profits tax rate by 0.1 percentage point and added an amendment to provide municipalities with one-time funds to make retirement payments. Critics of the tax cut have argued that this will primarily benefit larger corporations and shift costs to municipalities.
- Some OKLAHOMA lawmakers have expressed concern that proposed grocery tax cuts are unlikely to pass after the legislature approved a $700 million business incentive package for Panasonic.
- An amended tax cut bill has passed the SOUTH CAROLINA House and now heads to the Senate for concurrence. House amendments included the removal of the Senate’s $1 billion tax rebate plan.
- TENNESSEE recently expanded the eligible businesses that can receive the entertainment tax credit.
- VERMONT lawmakers have reached agreement on the spending side of the state budget but are still weighing three competing tax plans, including a proposed Child Tax Credit that remains “entirely unsettled.”
- WYOMING‘s Joint Revenue Committee will use a portion of its interim session to consider increasing the state cigarette tax, which is 60 cents for a 20-pack. The state has not increased the tax since 2003.
What We’re Reading
- Inequality.org explores how property laws and tax policies contributed to a century-long process of land theft wherein white farmers and landowners slowly stripped Black owners of their land.
- The Oklahoma Policy Institutes shows the impact of expanding the “grocery tax credit” by county.
- The Center on Budget and Policy Priorities provides resources to help states prioritize how to spend federal recovery funds and how to direct them to improving housing and environmental justice issues.
- A recent article in the Ohio State Business Law Journal, highlighted in TaxProf Blog, explores the constitutionality and applicability of a proposed mark-to-market tax in New York.
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