State Rundown 6/27: States Look at Raising Incomes at the Bottom, Taxes at the Top

Low-income working families got good news and bad news this week, as Earned Income Tax Credit (EITC) enhancements passed in California and advanced in Oregon, while minimum wage increases failed in Pennsylvania, Rhode Island, and Wisconsin. Meanwhile, the momentum for taxing wealth and the very rich continued to grow, as more one-percenters called for enacting progressive taxes, and Inequality.org held a star-studded conference on why and how to do so.

— MEG WIEHE, ITEP Deputy Director, @megwiehe

Major State Tax Proposals and Developments

• Working families with young children in CALIFORNIA will be getting a significant boost to their state EITC thanks to the repeal of some business write-offs that will help fund the $1 billion expansion. — LISA CHRISTENSEN GEE
• The PENNSYLVANIA House has passed a mixed-bag budget, increasing funding for public education, halting progress on increasing the minimum wage, increasing tax credits for private school vouchers, and eliminating the state’s cash assistance program for the poorest residents. The Senate is expected to vote on later this week and Gov. Tom Wolf has already signaled his support. — AIDAN DAVIS
• The RHODE ISLAND House has similarly passed a budget with increased education spending and  no minimum wage increase but also exempts feminine hygiene products from the sales tax while adding the tax to digital downloads and streaming services. The Senate still needs to vote on the measure. — AIDAN DAVIS
• WEST VIRGINIA lawmakers have passed a controversial education bill, providing for raises for teachers and school service personnel but also paving the way for the creation of the state’s first charter schools. Gov. Jim Justice is expected to sign the law despite previously opposing charter schools. — AIDAN DAVIS
• The WISCONSIN budget has passed both chambers and now heads to Gov. Tony Evers where it could be approved, partially vetoed, or subject to a line-item veto. The bill doesn’t incorporate core policy pieces that were priorities for the governor, including Medicaid expansion, legalizing cannabis, and raising the minimum wage. The middle-class tax cut included in the legislation would lower the bottom two marginal income tax rates. — LISA CHRISTENSEN GEE

State Roundup

• The COLORADO State Supreme Court heard a case on Tuesday to determine if licensing fees are taxes that would be subject to the constitutional limits set by TABOR (requiring voter approval).
• HAWAII Gov. David Ige is vetoing 20 bills, including a measure to tax large landowning entities known as Real Estate Investment Trusts and another to collect taxes from platforms like Airbnb.
• KANSAS has a long road to recovery from the Brownback tax cut experiments. Although state revenues are in great shape this year—contributing to a $1 billion surplus—the longer-term trajectory shows risks of deficits by at least 2023 if more isn’t done to increase funding for critical public services.
• It’s official—ILLINOIS became the 11th state to legalize cannabis with Gov. J.B. Pritzker’s signing of the law on Tuesday. The law will automatically expunge arrests for possession under 30 grams; and the governor has said that he will pardon convictions for possession up to that same amount.
• The Baltimore Sun Editorial board writes that MARYLAND state lawmakers considering raising taxes to fund the recommendations of a recent school improvement study may find encouragement from strong support for similar efforts at the local level in Baltimore and throughout the state.
• The budget process continues in MICHIGAN with lawmakers and the administration still far apart on the gas tax and how to fund infrastructure projects in the state.
• The tax and budget fight in NEW JERSEY is coming down to the wire with a shutdown looming July 1 if Gov. Phil Murphy and legislators cannot agree on the fate of Murphy’s proposed millionaires’ tax and property tax cuts, other funding priorities such as community college support, and the state’s controversy-laden business tax subsidies.
• A terrifying series of events in OREGON—which involved legislators going into hiding to avoid a vote on a climate bill (as they did earlier in the year over a school funding proposal), threats of armed violence, and the Capitol being shut down over terrorist threats—has ended for now as supporters of the climate package have withdrawn the bill. In brighter Oregon news, the House approved a minor increase in the state EITC, which would increase it from 11 percent of the federal credit to 12 percent for families with children under age 3 and from 8 percent to 9 percent for others.
• PUERTO RICO’s House voted to require the government to disclose the amount of tax breaks given to private companies on the island, an important first step in fiscal accountability.
• WYOMING Gov. Mark Gordon wants to review the state’s tax system, with an eye for assessing the risks of being so heavily energy dependent. A study being commissioned is meant to be the very beginning of talks about the state’s tax structure.

What We’re Reading

• The Economic Policy Institute and the Institute for Policy Studies held a one-day conference on “Taxing the (Very) Rich” featuring economist Paul Krugman, Congresspeople Jan Schakowsky and Chris Van Hollen, and other experts and advocates. You can still watch this important conference here.
• Uber-wealthy Americans including Disney heiress Abigail Disney, Facebook co-founder Chris Hughes, and one-percenter Eli Broad are joining the call for taxing wealth to lessen economic inequality and invest in shared priorities.
• Governing checks in on the status of state revenues from online sales taxes, one year after the U.S. Supreme Court ruled to allow states to collect them.

If you like what you are seeing in the Rundown (or even if you don’t) please send any feedback or tips for future posts to Meg Wiehe at [email protected]. Click here to sign up to receive the Rundown via email.

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