States Receive Federal Help and Guidance As Many Sessions End – ITEP
We had our noses buried in the new US bailout guidelines linked below under “What We’re Reading” when we heard the refreshing news that Missouri Executives are set to modernize their tax code, not only becoming the last state to apply sales taxes on online purchases, but also enacting an Earned Income Tax Credit (EITC). The EITC will give a much needed boost to middle and lower income families who pay the highest state taxes, and if they are able to make the credit repayable later, such as Massachusetts just did so with their child care deduction, it will do even more to help families and businesses in Missouri. At the same time, tax debates are also very active California, Colorado, Louisiana, Maine, and Nebraska. We also share some of our own reports on recent efforts in Arizona and several other states to undermine voter-approved reforms and democratic institutions themselves.
Main tax proposals and developments of the States
- COLORADO The leaders are proposing a major progressive tax rebalancing program that raises taxes on high-income households and large businesses and uses most of that income to help middle- and low-income families and small businesses. This assistance is provided by doubling the state’s EITC, funding a new refundable child tax credit, and expanding certain tax benefits for small businesses. The increases are achieved by capping itemized deductions, permanently eliminating a “pass-through” interruption for wealthy households, eliminating a deduction for unearned capital gains, and reducing deductions and loopholes used by large businesses. . – MARCO GUZMAN
- MISSOURI Members of the House and Senate will meet in a conference committee this week to settle differences on a bill that will likely reduce the top tax rate, apply state sales tax to sales in line and finally create an Earned Income Tax Credit (Non-Refundable) (EITC) in Show Me State after many years of effort. – DYLAN GRUNDMAN O’NEILL
- Carl Davis, ITEP Research Director, explains how some ARIZONA Lawmakers are attempting to directly reverse the will of voters by turning a ballot-approved tax hike for wealthy Arizonans into a net tax cut via an unprecedented overhaul of the regressive income tax bracket. Davis and Director of Communications Jenice R. Robinson discuss how this fits into a larger national effort to undermine democracy and entrench the racist and inequitable status quo, with more examples from FLORIDA, MISSOURI, and WISCONSIN.
- Earlier this week, the ALASKA The House of Representatives passed its version of the state budget bill that has already been presented to the Senate. It does not include the funding of dividends from permanent state funds, which should be funded in a separate bill.
- CALIFORNIA Governor Gavin Newsom is proposing to use federal aid and the recent state budget surplus quickly. His plan would spend $ 8 billion in a second round of cash payments for middle-income families, $ 5 billion in aid for people who have fallen behind on rent, and $ 2 billion in similar aid for catch up with utility bills, among other items to fight. homelessness and supporting families and businesses.
- Yesterday, GEORGIA Gov. Brian Kemp signed an executive order suspending state taxes on diesel and gasoline until Saturday night in response to price hikes linked to the Colonial Pipeline cyberattack. In other news, voters will decide whether farms that form partnerships should qualify for the same farm equipment tax exemptions as before the merger.
- Addition to KANSASAccording to the list of recent tax cuts, state lawmakers have approved a further reduction in property taxes for businesses closed or restricted due to the pandemic.
- LOUISIANA lawmakers have advanced tax rates for sports betting, which most parishes voted to legalize last year. The bill would set a tax of 10% for on-site sports betting and 18% for mobile betting. The state’s proposed tax swap bill, which would eliminate the Federal Income Tax Deduction (FITD) on state tax returns and reduce top income tax rates, has stalled .
- A handful of tax policy proposals in MAINE would create new income tax brackets and higher rates for the highest incomes in the state. Another would replace the existing graduated tax structure with a fixed 5% tax rate, resulting in the biggest tax cuts for the wealthiest Mainers.
- the MASSACHUSETTS The Senate released its version of the state budget for fiscal year 2022. The proposal does not include general tax increases and draws $ 1.55 billion from the state stabilization fund. However, the Senate bill would convert, among other things, child care and the state dependent tax deduction into a refundable credit, benefiting 85,000 low-income families.
- MISSOURI lawmakers passed their bizarre plan to create a small amount of revenue for infrastructure and a large amount of paperwork for drivers, sending Gov. Mike Parson a bill that will increase the gasoline tax by 12.5 cents per gallon on five years, but will also allow residents to claim a full refund if they keep all of their gasoline receipts for the year.
- NEBRASKA Lawmakers have slashed two tax cut proposals to try to pass them before their session ends, which won’t help either the state’s economy or the upside down tax code, but both would have been worse than those initially proposed. First, they reduced an unnecessary corporate tax cut proposal to make it less costly, lowering the top rate to 7.25% over two years from 6.84%. They also moderated another unnecessary proposal to eliminate taxes on Social Security benefits – mostly for high-income retirees – by slowly eliminating half the taxes instead of all.
- In addition to the tax cuts in the current budget proposal, NEW HAMPSHIRE lawmakers will also vote on whether to exempt payroll protection scheme grants from tax liability.
- NEW JERSEY joins a growing list of states considering using mileage charges to raise the funds needed to maintain infrastructure, as electric and fuel-efficient vehicles reduce the revenue potential of traditional gasoline tax.
- After several days of debate, TEXAS lawmakers approved a minor two-year extension to the controversial Chapter 313 corporate tax welfare program rather than the decade-long expansion that was originally proposed.
What we read
- As the Treasury Department begins distributing $ 350 billion in aid to states and communities included in the American Rescue Plan (ARP), the Center on Budget and Policy Priorities is discussing how best to use those funds to mitigate the challenges of the pandemic and advance equity, and CalMatters explores how the funds can be used as a down payment towards greater racial equity.
- State and local authorities are also taking a close look at recently released Treasury guidelines on the implementation of ARP and understanding its restrictions on state tax cuts.
- Atlantic describes how LouisianaThe old slave-run plantation economy is tied to today’s toxic petrochemical manufacturing and how corporate welfare sustains this industry at the expense of local incomes and the health of rural black communities.
- Harold Meyerson writes in The American Perspective this CaliforniaThe latter’s surplus shows that its progressive tax system is a model for other states to follow to ensure a strong and fair recovery.
- Route Fifty reports on Center for Tax Policy research on how recent federal tax changes may affect states, particularly through the EITC and child tax credit improvements in states that overlap versions federal credits.
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