Just Taxes Blog by ITEP

State Rundown 6/22: Southern States Edition

State Rundown 6/22: Southern States Edition

June 22, 2022

ITEP
.ITEP Staff

With many state legislative sessions wrapped or wrapping up and a handful of budget discussions still ongoing, we at ITEP want to take a moment to direct your attention south, and specifically, to the American South. ITEP’s Kamolika Das recently published a report focusing on how we can advance equitable tax policy in the south. The report leans heavily on historical context to help center the discussion on twelve southern states and exposes the roots of their state tax structures and the events and decisions that have led to the tax systems we see today. Most importantly, however, Das provides recommendations on how to build a more prosperous and equitable future. Read the full report here: Creating Racially and Economically Equitable Tax Policy in the South

Major State Tax Proposals and Developments

  • The MASSACHUSETTS Supreme Court ruled that a legal challenge to the wording of the proposed “millionaire tax,” known as the Fair Share Amendment, was in compliance with the state constitution and can appear on the November 2022 ballot. – MARCO GUZMAN

State Roundup

  • Los Angeles, CALIFORNIA, voters will have a chance in November to approve an increased tax rate on sales of high-value homes – 4 percent on homes valued $5-$10 million and 5.5 percent on homes valued over $10 million – with the proceeds to be dedicated to affordable housing and homelessness prevention efforts.
  • INDIANA Gov. Eric Holcomb plans to call the legislature into a special session on July 6 to discuss additional tax rebates.
  • A special session to address proposed tax cut compromises in MINNESOTA seems unlikely, leaving $7.2 billion of the state surplus unspent.
  • As an example of the scale of real estate transfer tax avoidance called out by NEVADA Gov. Steve Sisolak last week, the Las Vegas Review-Journal notes that The Cosmopolitan hotel-casino recently sold for $5.65 billion without incurring any transfer tax.
  • NEW HAMPSHIRE Gov. Chris Sununu signed legislation that cuts the business profits tax (BPT) rate from 7.6 percent to 7.5 percent and gives a one-time infusion of $28 million to municipalities in the hopes that they will use the funds to cut property taxes.
  • The NEW YORK Attorney General’s office issued a reminder to gas stations that the state is in a gas tax holiday – further evidence that such holidays are untargeted and unwieldy tax breaks that policymakers cannot guarantee make it into the pockets of consumers rather than oil companies.
  • As the end of the NORTH CAROLINA legislative session approaches, lawmakers in the House have advanced two bills concerning online sports betting—one of which would impose a 14 percent tax on gross gaming revenue and $1 million licensing fee.
  • OKLAHOMA legislators failed to reach an agreement about grocery tax cuts and income tax cuts during their special session.  The House passed a series of proposals, but the Senate decided not to take action on any of them. The Senate will instead assemble a working group to continue discussing tax cuts.
  • The PENNSYLVANIA Senate approved two different plans to cut the state’s corporate tax rate. One bill would cut the 9.99 percent rate to 6.99 percent, costing the state just over $1 billion annually by the 2026-27 fiscal year, while another plan would go even further and cut the rate to 5.99 percent.
  • Some TENNESSEE lawmakers are calling on Gov. Bill Lee to suspend the gas tax. Similar discussions are taking place in MISSISSIPPI.
  • VIRGINIA Gov. Glenn Youngkin “ceremonially” signed the budget and criticized Democrats for rejecting a proposed gas tax holiday. The budget includes higher standard deductions, cuts to the grocery tax, and making the Earned Income Tax Credit partially refundable.
  • Seattle’s Jumpstart tax, often referred to as a “head tax” because it is levied on employers for each employee paid over $150,000, was upheld in a WASHINGTON court this week. That’s good news for a city that is now forecasting a $117 million shortfall for next year.

What We’re Reading

  • David DeWitt of the Ohio Capital Journal explains how legislators are using inflation fears to push income tax cuts, even though these cuts would overwhelmingly benefit wealthy Ohioans over the low- and moderate-income households who disproportionately feel the pinch of inflation.
  • Researchers at the Wharton School at the University of Pennsylvania published a report studying the effects of state gas tax holidays, finding that recent suspensions in states like Maryland, Georgia, and Connecticut led to lower gas prices for consumers. The price cuts, however, were not maintained throughout the entirety of the holiday.

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