State Rundown 10/8: Credits, Cuts and Britney Bill

Plans to eliminate the state income tax in Arizona continue, with State Rep. Darin Mitchell telling officials that the push will come during the next legislative session. Mitchell, who chairs the Arizona House Ways and Means Committee, says the current strategy is to fight for a flat income tax that can be slowly eliminated over time: “We want to go to a flat tax next year, and then, maybe over the next five or six years we’ll ratchet down the collection until it no longer exists. We’ll just increase sales tax, on certain items.” Mitchell expects that Gov. Doug Ducey, who ran for election on a platform of eliminating the income tax, will support his plan. Were Mitchell’s plan to actually go forward, tax fairness in Arizona would become much worse. According to ITEP’s Who Pays? report, Arizona has the 8th most unfair tax system in the country, and the bottom 20 percent pay almost three times as much in taxes as a share of their income as do the top one percent.

New Jersey legislators are set to consider yet another tax cut for Atlantic City. The “Britney bill,” named after entertainer Britney Spears, would allow performers who play at least four nights in Atlantic City to avoid paying state income taxes on any income they make on any shows performed in New Jersey for the entire year. Proponents hope the measure will bring more high-profile stars to Atlantic City to do residencies, a popular practice in AC rival Las Vegas. Opponents, including New Jersey Policy Perspective, say the idea is a waste of money since performers follow audiences, not tax cuts. It’s worth noting that other tax breaks, including $400 million for failed casino project Revel, have not turned around Atlantic City’s economic prospects thus far.

The top budget official in Ohio said that legalizing marijuana could bring in $293 million in new tax revenue if a ballot initiative proposed for this November is approved by voters. Budget Director Tim Keene said that figure was based on the proposed new legal market capturing 70 percent of marijuana sales in the state. The backers of the ballot proposal say Keene’s estimate is too low, and that passage of the ballot measure could bring up to $500 million in new revenue to state coffers. 

Michigan Democrats recently unveiled a new plan to deliver tax cuts to middle-income families. Under the plan, a new $400-per-child income tax credit would be established for children under 13 living in households making up to $100,000. A new dependent care income tax credit would apply to these same households to offset some of the cost of childcare and eldercare. The Homestead Property Tax Credit would be expanded to cover families with income up to $100,000, increasing the threshold from $50,000. Seniors 65 and older would get an income tax exemption of $2,300 while all Michigan residents would get an income tax credit of up to 50% of the amount paid on state and federal student loans. House Minority Leader Tim Greimel said the $1 billion tax cut plan could be paid for by increasing the corporate income tax and renegotiating unredeemed refundable tax credits given to corporations.

Idaho State Commerce Director Jeff Sayer cautioned lawmakers that the state needed to demonstrate a commitment to public investments rather than cutting taxes to attract new residents and businesses. “In all of those conversations we’ve had with industry leaders, not one of them has brought up tax rates,” he noted, arguing that investments in education, infrastructure and broadband internet would bring more residents and higher-paying jobs. The Idaho Department of Labor projects that 109,000 new jobs will come to the state over the next decade, but only 14,000 working-age adults will become new residents in the same time period.