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December 21, 2016 1:26 PM
This week we are bringing you good cheer about several states taking the taxation of online sales into their own hands, budget tidings from Oklahoma, Alaska, and Virginia, and the gift of new taxes in Philadelphia and DC.
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– Meg Wiehe, ITEP State Policy Director, @megwiehe
- States have long been waiting for Congress to act on the Marketplace Fairness Act, which would allow them to collect sales taxes that are already legally due on online purchases from multi-state retailers such as Amazon.com. With no progress on that front, states such as Colorado have attempted to take action by requiring retailers to collect and remit – or at least report to the consumer – taxes due. These state-based efforts received a boost recently when the U.S. Supreme Court opted not to hear a challenge to Colorado’s law. The momentum may continue to grow. A rule in Tennessee is moving closer to implementation; Virginia‘s Gov. McAuliffe is pushing for such a measure to help plug that state’s revenue shortfall, and Alabama is looking to mimick the Colorado approach. Other states, including Nebraska and South Dakota, may follow suit as revenue experts identify uncollected online sales taxes as a contributing factor to those state’s revenue woes as well.
- Oklahoma‘s state finance secretary announced that the state did not experience enough revenue growth to trigger another income tax rate cut (this time from 5 to 4.85 percent). The possibility of triggering yet another rate cut, despite a projected budget gap exceeding half a billion dollars, rightly worried many Oklahomans.
- Alaska Gov. Bill Walker released his FY 2018 budget without any broad-based revenue options. Rather, it includes a gas tax increase, suggested restructuring of the state’s Permanent Fund, and an $890 million revenue gap. Walker anticipates working with the legislature to fill the remaining revenue shortfall.
- Virginia Gov. McAuliffe’s budget amendments use a variety of means to start addressing the state’s $1.5 billion shortfall but rely heavily on the state’s rainy day fund, which could put the state in a worse bind when the next recession hits.
- Soda purchasers in Philadelphia, Penn., will ring in the New Year with a new tax. A city judge dismissed the beverage industry’s attempt to block the city’s planned tax on sugary and sweetened beverages, despite claims that the tax is unconstitutional on the grounds of duplicate taxation.
- An audit of Tax Increment Financing (TIF) projects in Nebraska is strengthening calls for reform of how localities are using the tax break, which is intended to spur local economic development but is carried out with “remarkably little monitoring and oversight” and can push property taxes upward.
- The push continues, largely from conservation groups, to raise Iowa‘s state sales tax 3/8ths of a cent to support water quality improvements.
- One legislator in Tennessee is advocating for diverting sales tax revenue to local governments to help them deal with budget woes. The state could consider instead cancelling its decision from earlier this year to phase out the Hall Tax on dividend and interest income for high-income Tennesseans, which is shared with local governments and is one of the few progressive pieces of the state’s tax code.
- The District of Columbia City Council has passed a paid family and medical leave policy that allows all workers in the district access to time off for illness, child-bearing, and assistance with family medical issues. The system will be funded much like unemployment insurance, via a payroll tax that goes into a district-wide pool.
What We’re Reading…
- CBPP’s new report, How State Tax Policies Can Stop Increasing Inequality and Start Reducing It, explains how income disparity has reduced opportunity and weakened the overall economy, and the steps policymakers can take to reverse that trend.
- In a new report the Pennsylvania Budget and Policy Center proposes a “Fair Share Tax Plan” that explores ways in which the state can raise revenue while sparing most Pennsylvanians.
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