Excise Tax Law

April showers deliver weeds and flowers – ITEP

May 7, 2021

.ITEP employees

This week’s state financial news is a reminder that while advocates of great economic and racial justice have won some major progressive victories lately, anti-tax zealots have also worked hard. Legislators have pushed or passed worrying regressive tax cuts or postponements Idaho, Kansas, and Montanaand actively discuss them in Iowa, Nebraska, New Hampshire, and Texas. As we reported last week, seeds were planted a decade ago for incremental improvements Washington’s Tax legislation budged with legislature approval last week and blossomed this week with the signature of Governor Jay Inslee.

Important government tax proposals and developments

  • IDAHO The legislature passed a controversial property tax law with bipartisan opposition. The bill increases the homeowner’s exemption, slightly increases the breaker tax break, and provides tax breaks for developers and businesses. In other news, lawmakers are one step closer to passing regressive tax cuts that would lower the state’s highest income tax bracket, lower the number of income tax brackets, and cost the state $ 383 million in the first year. – MARCO GUZMAN
  • MONTANA Legislature ends the 2021 legislature with more than $ 100 million in tax cuts, including a cut in the highest income tax rate, an increase in property tax credit, an increase in business tax exemptions, and a cut in local property taxes that support schools. – MARCO GUZMAN
  • NEBRASKA Legislators tabled a dangerous proposal in two votes yesterday to replace state income, sales, property and inheritance taxes with a single consumption tax. As written, the bill would cut funding for schools, roads, health care and other priorities by about $ 4 billion a year while granting the biggest tax cuts to wealthy Nebraskans like the ultra-rich gubernatorial candidate who supports it. According to preliminary estimates by ITEP, if the excise rate was increased to make the proposal revenue-neutral, the tax rate would have to be at least 20 percent and would result in an even more dramatic tax shift that would raise taxes on low-income and low-income families and only cut them for families the households with the highest income. – DYLAN GRUNDMAN O’NEILL
  • WASHINGTON Governor Jay Inslee signed the two bills we reported on here last week – a unique excise tax on extraordinary profits from capital gains transactions and a tax break for working families modeled on the federal EITC – which officially came to life with two proponents of progressive tax reforms had worked for years to achieve this. The excise tax is already facing a legal challenge and another is expected. – DYLAN GRUNDMAN O’NEILL

Status summary

  • ARKANSAS Governor Asa Hutchinson signed a bill to end sales tax on precious metals such as gold and silver. 40 states currently exempt gold and silver in whole or in part from sales tax.
  • CONNECTICUT Local residents protested outside Governor Ned Lamont’s home over the weekend to support ongoing tax reforms in the legislature’s budget, which Lamont opposes.
  • FLORIDA Legislators have passed a nearly $ 200 million tax package that includes a number of new tax cuts, such as: B. Tax credits for companies offering college internships and Freedom Week sales tax vacation of $ 61.5 million effective July 1st. Tax-exempt items include tickets to music and sporting events, fitness memberships, and outdoor recreational items.
  • GEORGIA Governor Brian Kemp signed a series of tax bills that included a tax credit assessment process and added new special interest tax breaks that could jeopardize $ 50 million federal funding.
  • HAWAIIThe legislature ended last week. While lawmakers failed to account for tax hikes for the rich (SB 56, SD 1) or an extension of the state’s Earned Income Tax Credit (EITC) (which expires in late 2022), it improved the state’s low. Income home loan, increase a rental car tax, and give counties the power to increase temporary housing tax.
  • INDIANA Legislators passed an EITC increase from 9% to 10% before adjourning its 2021 legislature last week.
  • IOWA The legislature has exceeded its originally planned postponement and is still debating, among other things, proposals to accelerate income tax cuts and to abolish the state inheritance tax.
  • The KANSAS Legislators voted to overturn Governor Laura Kelly’s veto of Senate Bill 50, a major tax cut bill that will primarily benefit multinational corporations and high-income individuals. The bill also includes a modest increase in the standard deduction. Part of the costs is offset by the fact that market participants are obliged to collect and transfer sales tax.
  • Legislators in MAINE continue to weigh a number of spending and tax proposals. There appears to be bipartisan support on issues ranging from the sharing of municipal revenue to property tax relief and infrastructure.
  • The MASSACHUSETTS The House of Representatives passed its budget for 2022. It includes the creation and renewal of tax credits, as well as a delay in reinstating the state charitable contribution deduction.
  • MISSOURI Legislature is in a busy phase two weeks before its session with final decisions to be made on gas tax, online sales taxes and tax credits for middle and low income families.
  • NEW HAMPSHIRE Legislators are considering a number of tax cuts, including lowering meal and room taxes, lowering business tax, exempting some small businesses from paying business tax, and phasing out interest and dividend taxes. The New Hampshire Fiscal Policy Institute estimates these cuts could cost the state $ 158 million over the next biennium.
  • A TEXAS The legislature made a misguided proposal to replace the state property tax with higher consumption taxes.

What we read

  • The TaxProf blog highlights recent research arguing that the federal state and local tax deduction (SALT), which primarily benefits wealthy households and communities, essentially subsidizes economic segregation.
  • Ball State University economist Michael J. Hicks writes in MarketWatch that the collective portrayal of people and businesses moving into low-tax countries is both a misreading of the data and a misunderstanding of how people make decisions. In short, “Taxes are a price for living in a given city, but value – not price – is the key decision variable. For the average family, the value lies in tangible amenities like safe, livable neighborhoods, quality schools, and great parks and walkways. Both businesses and families are responding to this information and moving to places with better schools and safe, livable neighborhoods. In doing so, they move to places with much higher taxes, due to the hunt for value rather than price. “
  • As people turn their attention to what life might be like after the pandemic, Route Fifty shares how local government officials envision the new normal, with around half expecting to continue virtual board meetings, for example.
  • In this context, Governing notes that the increased automation and use of robots sparked by the pandemic are likely to be largely permanent, creating permanent changes in the labor market that workers and society will find difficult to adapt to.
  • Route Fifty also reports increased rental debt across the country and in the states and cities where the problem of people falling behind on rent is worst.

If you like (or dislike) what you see on Rundown, please send feedback or tips for future posts to Meg Wiehe at [email protected]. Click here to register and receive the rundown by email.