Just Taxes Blog by ITEP

State Rundown 9/21: Earth, Wind, Fire & Taxes Edition

State Rundown 9/21: Earth, Wind, Fire & Taxes Edition

September 21, 2022

ITEP
.ITEP Staff

Do you remember/the big tax news innn September? Well, if not, we at ITEP got you covered. Missouri lawmakers are aiming to pass a permanent tax cut in response to a temporary surplus during their ongoing special session that would reduce the top marginal tax rate. In Alaska, lawmakers tried to chase the (vape) clouds away, but the governor, after vetoing a bill to tax e-cigarettes, said they’re here to stay. And importantly, our hearts were ringin’ when the Center for Public Integrity published a remarkable report highlighting the impact of states that rely heavily on regressive consumption taxes and how they worsen inequality.

Major State Tax Proposals and Developments

  • The MISSOURI legislature is in special session with directive to come to a consensus on a tax cut plan. Multiple bills are being considered, including a bill that would reduce the top income tax rate to 4.95 percent in 2023 with the ability to trigger down to 4.5 percent in the future which is soon to be considered on the Senate floor.  – NEVA BUTKUS
  • State Roundup
  • ALASKA Gov. Mike Dunleavy vetoed a bill that would have taxed electronic cigarettes and increased the age to legally possess tobacco products from 19 to 21, explaining that the tax increase would have been too significant.
  • COLORADO Gov. Jared Polis announced recently that residents can make state tax payments using cryptocurrencies.
  • FLORIDA Gov. Ron DeSantis proposed adopting $1.1 billion in tax breaks through multiple tax holidays during the next legislative session. The proposal also includes several permanent tax exemptions on items such as diapers, children’s clothing, cribs, strollers, and medical equipment. A recent ITEP report, as well as a Florida Policy Institute brief, summarize why this approach to tax cuts is problematic and ineffective.
  • GEORGIA gubernatorial candidate Stacey Abrams expressed support for legalizing sports betting to fund educational initiatives. In other news, the state’s new personhood provisions now allow pregnant tax filers to claim their fetus as a dependent. This controversial policy is estimated to cost the state $10 million to $20 million annually. The state does not offer any refundable tax credits for families with children, which are proven to significantly reduce poverty and improve outcomes.
  • LOUISIANA’s House Ways and Means Committee began discussions on personal income tax elimination. The personal income tax raises $4.3 billion annually in Louisiana.
  • More details have emerged regarding MARYLAND gubernatorial candidate Wes Moore’s tax policy proposals. He stated that he does not anticipate raising taxes and wants to examine eliminating either the estate or inheritance tax, but also wants to address the state’s “upside-down taxation system”. Republican candidate Dan Cox has proposed decreasing or eliminating the income tax altogether.
  • MASSACHUSETTS Gov. Charlie Baker announced that residents should expect to receive tax refunds beginning in November. The refunds were triggered after the state brought in almost $3 billion in excess state tax revenue.
  • The MICHIGAN legislature is returning this week to continue tax cut discussions. House Republicans are pushing for income tax cuts despite Gov. Gretchen Whitmer already vetoing multiple tax cut proposals. Democrats and Gov. Whitmer support $500 tax rebate checks.
  • The MONTANA legislature will not be holding a special session in September to consider tax rebates.
  • Democrats in NEW MEXICO have set their sights on increasing the state’s alcohol tax in the upcoming session. The state currently leads the nation in alcohol-related deaths.
  • NEW YORK residents who qualify for the state’s Earned Income Credit and Empire State Child Credit can expect boosts to those credits to begin arriving in October, reflecting $475 million in payments approved earlier this year in the state budget.
  • Despite calls from NORTH CAROLINA Gov. Roy Cooper to waive the state’s tax on student loan debt forgiveness, Senate President Pro Tem Phil Berger commented that it was not a priority.
  • Governor Kevin Stitt in OKLAHOMA issued a statement calling for income tax cuts and an outright elimination of the state’s grocery tax, with claims that such a policy shift would fight inflation.
  • OREGON lawmakers are considering better oversight mechanisms for business tax subsidies like the state’s Enterprise Zone program, which investigative reporting by The Oregonian/OregonLive revealed has become dominated by big tech company data centers.
  • WASHINGTON will be the first state to tax NFTs (Non-Fungible Tokens, digital items whose uniqueness is guaranteed by blockchain code similar to cryptocurrencies), which will be interesting and challenging for tax administrators.
  • WEST VIRGINIA Gov. Jim Justice has come out against the Property Tax Modernization Amendment (Amendment 2) that would give the legislature the authority to exempt certain personal property taxes. West Virginia Center on Budget and Policy Executive Director Kelly Allen stated that eliminating machinery taxes could lead to more automation and fewer jobs.

What We’re Reading

  • Reporting by the Center for Public Integrity, picked up in Mother Jones and Crosscut among others, highlights the tragic, real-life impacts of regressive state tax codes.
  • The New York Times reports on efforts in Oregon and elsewhere to consider raising alcohol taxes to reduce illnesses, injuries, and other costs related to drinking.
  • Route Fifty explains how some details of state and local taxation of online sales are still being figured out, and how in some cases the intersection of those details with pre-existing tax incentive programs are causing conflict between cities and states.

 

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