Just Taxes Blog by ITEP

State Rundown 9/1: Labor Day Edition

State Rundown 9/1: Labor Day Edition

September 1, 2021

ITEP
.ITEP Staff

Labor Day is around the corner and in the spirit of celebrating the achievements of workers around the country, we here at ITEP want to call attention to the states (and territories) that are using tax policy to support workers and residents alike. Puerto Rico will use funds from the American Rescue Plan to help pay for an expansion its Earned Income Tax Credit (EITC), which the governor says will benefit over 500,000 families. Meanwhile, states like Colorado and Mississippi might be listening to some bad advice in their respective attempts to support their residents, as the governor for the former recently voiced his support for having no personal income tax, while lawmakers in the latter are considering eliminating theirs as well. Luckily, our own Kamolika Das has outlined why eliminating the personal income tax (particularly in Mississippi) is a terrible idea. You can listen to her explain why here, or read her more detailed thoughts here.

Major State Tax Proposals and Developments

  • In a statement at a political conference, COLORADO Gov. Jared Polis recently said that the state’s income tax should be zero and that other ways of generating revenue that don’t include taxing income should be considered. — MARCO GUZMAN
  • MISSISSIPPI lawmakers met last week to discuss the possibility of eliminating the state income tax; advocates for low-income families and the business community alike have opposed the proposals. – KAMOLIKA DAS

State Roundup

  • ALABAMA teachers filed a lawsuit against state officials, stating that a legislative resolution to extend an aircraft sales tax exemption is unconstitutional and would reduce revenues for education.
  • Stimulus checks go out this week to about 600,000 CALIFORNIA residents, targeted to those with incomes less than $75,000 and amounting to up to $600 per household plus an additional $500 if the household includes a dependent.
  • An IDAHO lawmaker who is the co-chair of a committee currently studying property taxes is working on a proposal that would create an exemption based on a county-specific formula to provide greater benefits to those who stay in their homes for more than a year.
  • ILLINOIS has become the most recent state to allow for a SALT workaround for S-corporations, which will allow these businesses to lower their federal tax liability. The workaround allows S-corps to avoid capping their SALT deduction, or state and local tax deduction, at $10,000 when filing federal taxes.
  • MICHIGAN lawmakers broadly support proposals in the House and Senate to exempt feminine hygiene products from sales tax.
  • A former MONTANA state lawmaker is proposing a constitutional ballot measure to create an “acquisition-value” property tax system, which would cap property taxes at 1 percent of a property’s 2019 assessed value or market value once the property is sold.
  • Clark County, NEVADA, home of the Las Vegas strip, is joining a legal fight to try to make online hotel booking companies pay room taxes.
  • The NEW JERSEY gas tax will decrease by 8.3 cents a gallon, or 16 percent, on October 1st.
  • The governor of PUERTO RICO has signed a bill that expands the island’s EITC following the passage of the American Rescue Plan, which made additional funds available to help cover the cost of the program.
  • New legislation in RHODE ISLAND allows municipalities to establish a program that would allow elderly volunteer time to count towards eligibility for an annual property tax credit.
  • VIRGINIA gubernatorial candidate Glenn Youngkin continues to make tax cuts a centerpiece of his campaign. He proposes $1.8 billion in one-time tax cuts plus recurring tax cuts that would total $1.4 billion per year. At the same time, a new poll conducted found that a majority of Virginians would be willing to pay higher taxes to support public services such as education, health care, and housing.

What We’re Reading

  • Although the survey focused on federal policies, a recent Yale survey of tax law professors found strong support for many progressive policies that also exist at the state level, including higher tax rates for high-income households, expansions of the Earned Income Tax Credit (EITC) and Child and Dependent Care Tax Credit (CDCC), higher rates on capital gains and corporate profits, expanding estate taxes, and repealing regressive tax breaks like the Qualified Business Income deduction.
  • Policy Matters Ohio released a new report that expands upon the impact of the state’s decision to eliminate its committee tasked with scrutinizing state tax expenditures.
  • Chicago, Illinois, Alderman Byron Sigcho-Lopez writes in the Chicago Sun-Times that recent property tax reforms may contribute to gentrification in the working-class, predominantly Latinx neighborhood of Pilsen.
  • Connecticut’s Hartford Courant looks back at the 30-year history of the state income tax and its major contributions to the state budget and tax fairness.

 

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