June 19, 2019
June 19, 2019
As Americans observe Juneteenth today–the day two years after the Emancipation Proclamation on which news of the end of the Civil War and slavery reached some of the last enslaved people in Texas—most people’s attention should be on celebrating victories, remembering losses, gathering strength to continue the fight for racial justice, and the accompanying Congressional reparations hearings. In comparison, state tax debates over matters such as reluctance to invest in infrastructure in Michigan and Missouri, approval of income tax cuts in Wisconsin, and a budget standoff in New Jersey may seem unimportant and irrelevant. But we encourage our readers to think about how state policies often serve to enrich and empower white and wealthy households, and how our tax codes and public investments can be redirected toward advancing racial equity in all states.
— MEG WIEHE, ITEP Deputy Director, @megwiehe
Major State Tax Proposals and Developments
- The MICHIGAN House finalized its budget and transportation bills last week, proposing receipts from sales taxes on gasoline be diverted to pay for infrastructure projects rather than raise the gas tax as Gov. Gretchen Whitmer continues to advocate. As budget negotiations continue between the legislature and the administration, advocates are still pressing for a stronger state Earned Income Tax Credit (EITC), increasing the credit from 6 percent to 12 percent of the federal EITC. — LISA CHRISTENSEN GEE
- The WISCONSIN Joint Finance Committee approved $450 million in new income tax cuts over the next biennium. They also approved the collection of taxes from online sales and are using general fund dollars to increase a credit that benefits homeowners. The magnitude of the proposed income tax cut is about half what Gov. Tony Evers proposed and unlike the governor’s plan does not scale back a generous tax credit that benefits businesses and wealthy state residents to help offset the cost of the cut. — LISA CHRISTENSEN GEE
- A budget veto and government shutdown could be on the horizon in NEW JERSEY. The legislature is set to vote Thursday on their budget proposal, which attempts to balance the budget through a combination of optimistic revenue projections, withdrawals from the Rainy Day Fund, and lower than requested funding levels for some Gov. Phil Murphy’s priorities such as community colleges. It also notably leaves out Murphy’s proposed millionaires’ tax, which would help fund those priorities while reducing economic and racial inequities. — DYLAN GRUNDMAN
- Lawmakers are expected to vote on two tax measures in CALIFORNIA on Thursday, including closing some businesses loopholes from the federal Tax Cuts and Jobs Act (TCJA) reforms to fund increases to the state’s EITC and a cell phone fee to build up the state’s 911 system infrastructure. In other state tax news, cannabis tax rates will not be going up over the next 6 months despite agency authority to determine otherwise.
- State revenues from cannabis taxes just passed the $1 billion mark in COLORADO since legalization in 2014.
- The collection of taxes from online sales may be a bit delayed in LOUISIANA. Given the decentralization and complexity of the state and local sales tax systems, lawmakers are prepared to extend the collection deadline by another year.
- MAINE’s Gov. Janet Mills signed the state’s 2-year budget earlier this week. The budget includes funds for Medicaid expansion, education, local revenue sharing, the state’s rainy-day fund and an increased Homestead Exemption for homeowners (from $20,000 to $25,000). Many bills remain under consideration, including an increase to the state’s EITC. The Legislature continues to work up until its scheduled adjournment—today.
- MAINE and VERMONT this week became the third and fourth states to ban single-use plastic bags. Both bills, signed by their respective governors, will require a charge (5 cents in Maine and 10 cents in Vermont) for shoppers who fail to bring their own bags and require one from the business of purchase.
- Investors backing startup businesses in MINNESOTA may qualify for the newly reinstated angel tax credit, which will fund $10 million in credits in tax years 2019 and 2021.
- After MISSOURI voters rejected a gas tax update last year to pay for repairs and improvements to the state’s dilapidated roads and bridges, lawmakers were able to scrape together $50 million to start work on the most urgent projects—a shoestring budget compared to the need.
- Lawmakers in NEW HAMPSHIRE and RHODE ISLAND continue to debate components of their state budgets. Rhode Island’s House of Representatives is expected to vote this Friday while New Hampshire’s full Legislature expects to vote next week.
- After a proposed tobacco tax increase was seemingly snuffed out earlier in OREGON’s legislative session, lawmakers were able to bring it back to life and are on the verge of sending it to voters.
- The UTAH Tax Restructuring and Equalization Task Force is starting a statewide “listening tour” as part of its work to assemble recommendations for modernizing the tax code. Utah readers—let your voice be heard!
What We’re Reading
- The Center on Budget and Policy Priorities released a report today exploring how states could free up needed revenue by better targeting senior tax breaks to those most in need.
- Route Fifty and Governing report on the new IRS regulations ITEP Research Director Carl Davis wrote about here last week, which crack down on the use of charitable donations as tax shelters for working around the new federal limits on the State and Local Tax (SALT) deduction or channeling public funds to private schools.
- Stateline notes that small- and mid-sized U.S. cities are growing the fastest, due in large part to the high housing costs in larger cities.
- Governing reports on the underappreciated value of “coordinating commissions” that can help set and administer policy within major areas like higher education, transportation, and economic development.
- Route Fifty digs into why SOUTH DAKOTA’s “contrarian” pension fund approach has yielded one of the best-funded accounts in the country.
- Fewer states have had dramatic ends to their budget sessions compared to sessions two years ago thanks to two key factors, Governing reports: more one-party states and less stressed fiscal conditions.
- Experts agree that film tax credits are wasteful, ineffective tools for economic growth. In an op-ed, Policy Matters Ohio’s Wendy Patton pushes back against the state senate’s insistence on maintaining the credit at the cost of $40 million to OHIO state taxpayers.
- Jurisdictions that are home to major non-profit institutions, like Boston, are becoming more dependent on PILOTs (payments in lieu of taxes) to ensure everyone is contributing to the cost of local public services.
- New Federal Reserve data provoke analyses on income inequality and tax avoidance.
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- ITEP Work in Action
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- Personal Income Taxes
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- Sales, Gas and Excise Taxes
- Sales, Gas and Excise Taxes
- SALT Deduction
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- Tax Reform Options and Challenges
- Taxing Wealth and Income from Wealth
- Trump Tax Policies
- Who Pays?