August 31, 2017
Deputy Executive Director
August 31, 2017
Tax and budget debates are progressing at different paces in different parts of the country this week. In Connecticut and Wisconsin, lawmakers hope to finally settle their budget and tax differences soon. In South Dakota, a court case that could finally enable states to enforce their sales taxes on online retailers inches slowly closer to the U.S. Supreme Court. In New Jersey, in contrast, lawmakers were able to adapt quickly to the recent emergence of “daily fantasy sports” pseudo-gambling sites and will now include those activities in the state’s tax base. In California, forward-thinkers are trying to figure out how to “tax robots” as our economy becomes ever more mechanized. And all states, particularly those in the South, should check our “What We’re Reading” section for news on the long-term economic impact of climate change.
— Meg Wiehe, ITEP Deputy Director, @megwiehe
- The latest proposal to bridge Connecticut‘s budget impasse from House lawmakers includes several controversial tax changes: increasing the general sales tax and the luxury goods sales tax, restricting an existing broad property tax credit to only seniors and parents, cutting back the state Earned Income Tax Credit, raising tobacco and hotel taxes, and creating a new 25-cents-per-ride fee for ride-sharing companies like Uber and Lyft.
- Wisconsin lawmakers anticipate having a budget in the next few weeks, as they still have education and transportation budgets to work out. Meanwhile, a business coalition is forming to lobby for the $3 billion tax incentives for Foxconn.
- Meanwhile, Pennsylvania lawmakers appear nowhere near agreement on their budget and Governor Tom Wolf warned House and Senate members that there would be “dire consequences” to their inaction on a budget proposal including draconian spending cuts.
- A South Dakota Supreme Court case with implications for the whole country is moving along, as the attempt to overturn a U.S. Supreme Court ban on states collecting sales taxes from online retailers could soon be decided at the state level, opening up the next step of an appeal to federal courts. Meanwhile, Indiana is joining the list of states eager to modernize sales tax laws by suing online retailers Overstock and Wayfair for the collection of Indiana sales taxes.
- Hawaii legislators have begun a special session, with potential hotel and excise tax increases in Honolulu on the agenda to save the island’s struggling rail project.
- Louisiana Gov. John Bel Edwards is back in the saddle attempting to build support for state tax reform, convening meetings with business leaders from across the state. Support from the business community will be necessary (who knows if sufficient) to get Republican lawmakers on board.
- Illinois lawmakers passed an education funding plan in time for the beginning of the school year. To secure enough votes for passage, the legislation also includes a tax credit designed to steer public dollars towards private schools by reimbursing donors for 75 percent of the amount they give to support private school vouchers. The legislation also prohibits taxpayers from receiving both a state tax credit and a federal deduction in exchange for a single donation—a provision likely added in response to ITEP’s critique of tax avoidance schemes in other states, as publicized in a column in the Chicago Tribune.
- The Alaska legislature’s failure so far to shore up the state’s budget crunch by enacting a state income tax or finding other revenue soultions is putting local jurisdictions “all in the same leaky fiscal boat of declining state assistance for education, school debt service reimbursement and community assistance,” and forcing local officials to scrounge for revenue through sales, property, and lodging tax increases.
- Tax subsidies awarded to Apple for building a data center in Iowa are estimated to cost the state more than $4 million per job, leading the Des Moines Register to call for a more robust public debate around such incentives.
- While an Oregon task force seeks ways to close the state’s pension deficit, taxpayers will be getting a “kicker” credit for the second biennium in a row. The credit is triggered when state revenues come in higher than projected two years previously. The credit primarily benefits the wealthiest Oregonians and diverts money that could be saved in the state’s Rainy Day Fund in preparation for the next economic downturn.
- New Jersey lawmakers’ efforts to regulate and tax daily fantasy sports companies will finally be paying off, as Gov. Chris Christie has signed into law a bill to apply a 10.5 percent tax on their winnings, expected to raise $6.6 million per year.
- Unsurprisingly considering its leading role in the tech industry, San Francisco, California, may be leading the way in experimenting with “taxing robots.”
- Intransigence in the Alabama legislature around raising the state’s gas tax is leading one lawmaker to again propose authorizing cities and counties to raise their own local option gas taxes, though many local officials continue to insist it is a statewide issue that needs a statewide solution.
- The Nebraska Department of Revenue estimates that the state’s tax subsidies for businesses are a net loss for the state budget, producing more costs than benefits through at least 2025.
- New revenue projections in New Mexico show the state may have just enough money to avoid budget cuts this year—but there isn’t much wiggle room.
- Idaho gubernatorial candidate Brad Little released a plan detailing $350 million in tax cuts he would pursue if elected, primarily to be raised by shaving off 1/10 a percentage point to the personal income and corporate tax rates cuts each year state revenues could cover the cost.
What We’re Reading…
- The Roanoke Times weighed in this week with a thoughtful and well-researched editorial on two proposals to create regional tax-cut zones in hopes of spurring economic growth in struggling parts of Virginia. Having reviewed the history and the research, the Times concludes that not only do tax cuts not grow local economies, they’re a bad strategy for statewide policy too.
- District of Columbia, Maryland, and Virginia policymakers are considering a regional 1 percent sales tax to improve the deteriorating condition of the regional mass transit system. But three local tax and budget think-tanks have released a joint report (also covered in the Washington Post) using ITEP data to show that such a tax would fall disproportionately on low- and middle-income families and people of color.
- The Center on Budget and Policy Priorities estimates that public colleges’ funding has plummeted about 10 percent overall and 16 percent on a per-student basis since 2008. Governing has called this disinvestment a “lost decade” for higher education in the U.S.
- A first-of-its-kind study in Science estimates the long-term economic costs of climate change for every county in the U.S., and the results do not bode well for the South.
- A Yale Law & Economic Research paper explores the contexts in which an efficiency emphasis biases policies for the wealthy.
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Deputy Executive Director
- Corporate Taxes
- Education Tax Breaks
- Federal Policy
- ITEP Work in Action
- Personal Income Taxes
- Property Taxes
- Refundable Tax Credits
- Sales, Gas and Excise Taxes
- Sales, Gas and Excise Taxes
- State Corporate Taxes
- State Policy
- State Reports
- Tax Analyses
- Tax Basics
- Tax Credits for Workers and Families
- Tax Reform Options and Challenges
- Who Pays?