Just Taxes Blog by ITEP

State Rundown 9/7: Labor Day Week Provides Sobering Reminder of Steps Forward, Back

State Rundown 9/7: Labor Day Week Provides Sobering Reminder of Steps Forward, Back

September 7, 2022

ITEP
.ITEP Staff

Though Labor Day has passed, advocates on the ground in states across the country are continuing to uphold the spirit of the labor movement. Specifically, in California, a bill to support fast-food workers was passed, which authorizes an oversight council to raise the minimum wage for these workers to up to $22 per hour. In Nebraska, voters will now have a chance to decide to increase the state minimum wage to $15 per hour by 2026 followed by cost-of-living adjustments in later years. There’s no greater reminder for how quickly progress can be undone, however, than Idaho. Lawmakers in the Gem State have, over the course of several years, chipped away at the progressivity of their state’s income tax and most recently, made the switch to a 5.8 percent flat tax over the course of a one-day special session. But the fight for things like labor rights and tax justice is a marathon, not a sprint. Onward!

Major State Tax Proposals and Developments

  • It only took IDAHO Gov. Brad Little and state lawmakers one day to pass a tax cut during the recent 2022 special session. The bill enacts a flat, 5.8 percent personal income tax, while spending $500 million on tax rebates ($300 for single filers or $600 for joint filers). Also, the bill transfers $330 million annually from sales tax collections to K-12 education. While inflation concerns and a record budget surplus spurred calls for the special session, analysis of the bill from the Idaho Center for Fiscal Policy with support from ITEP found that the average tax cut for wealthy residents was far greater than it was for lower-income households. Questions remain about the future of the Quality Education Act—an initiative designed to impose a new top rate on wealthy earners that had recently gained enough signatures to appear on the November ballot—but it is likely that this new tax bill will undercut the measure. – MARCO GUZMAN

State Roundup

  • Some ALABAMA legislators are voicing support for a one-time tax rebate during the next legislative session in early 2023.
  • As one small piece of their broad efforts to reduce emissions and combat climate change, CALIFORNIA lawmakers approved a $1,000 refundable credit for low-income residents who live car-free. Gov. Gavin Newsom is expected to sign the bill.
  • CALIFORNIA legislators also passed a fast-food worker support bill that includes empowering a 10-member oversight council to raise the minimum wage for these workers to up to $22 per hour.
  • FLORIDA Democratic gubernatorial candidate Charlie Crist stated that he would bring back generous film tax incentives if elected, despite research by the legislature’s Office of Economic and Demographic Research that showed the tax incentives did not deliver.
  • GEORGIA Gov. Brian Kemp extended the suspension of the state’s gas tax for a fourth time through October 12th. The suspension costs the state more than $150 million a month in tax revenue.
  • Greenfield LOUISIANA LLC’s grain elevator project in St. John the Baptist Parish, a rural and predominantly Black community on the Mississippi River, would avoid $209 million in property taxes over 30 years after securing a PILOT – or “payment in lieu of taxes” deal. PILOT deals allow local governments to take title to economic development projects for a duration of time, therefore exempting the company from paying property taxes.
  • Legislative leaders in MICHIGAN continue to discuss a tax cut package behind closed doors, but a finalized plan may not come to fruition until the November elections have passed.
  • MISSOURI lawmakers have postponed the start date of their special session to further discuss Gov. Parson’s $700 million income tax cut proposal. The governor’s proposal includes reducing the top rate from 5.3 to 4.8 percent, increasing the standard deduction, and eliminating the bottom income tax bracket.
  • Signatures have been gathered and submitted to give NEBRASKA voters this November a chance to raise the state’s minimum wage to $15 per hour by 2026 with cost-of-living increases thereafter.
  • NEW JERSEY Gov. Phil Murphy revealed a bipartisan proposal to address the issue of how remote workers employed by out-of-state companies are taxed. The proposed legislation would incentivize New Jersey remote workers who work for New York companies to ask New York to send the income taxes they paid to New York to New Jersey instead; if they succeed, they will receive tax credits worth half the amount recovered from New York.
  • In TEXAS, Gov. Greg Abbott signaled his support for other Republicans that want to repeal the state’s “tampon tax” in next year’s legislative session.
  • Initially, sports betting operators in VIRGINIA were not required to pay taxes on spending related to promotions. As part of a state budget agreement earlier this year, legislators closed these loopholes; data from the Virginia Lottery suggests that closing the loophole has increased tax revenues.
  • WEST VIRGINIA Gov. Jim Justice, along with several other lawmakers, have called on the legislature to revisit personal income tax cuts after negotiations stalled this summer. The House Speaker announced plans to call the House back into session this Monday, but it seems like there is little interest in the Senate.

What We’re Reading

  • An article by Nonprofit Quarterly and Good Jobs First showcases the harm done to communities when elected officials depend too heavily on tax breaks as an economic development strategy.
  • The Florida Policy Institute released a report about how the state spends billions of dollars each year on tax expenditures that are often unchecked or evaluated.
  • New York Times columnist Paul Krugman wrote about how Mississippi’s refusal to adequately invest in infrastructure and public services has led to the Jackson, Mississippi, water crisis. He writes, “Imagining that tax cuts will bring prosperity to a poorly educated state that can’t even provide its capital with running water is just delusional.”
  • In addition to the California and Nebraska minimum wage news above, Route Fifty reports on the 14 minimum wages around the country that will rise next year because to keep pace with inflation.

 

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