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Thanks for reading the State Rundown! Here’s a sneak peek: Delaware lawmakers approve a corporate tax
giveaway for a potential DuPont and Dow merger. West Virginia lawmakers leave without a budget after voting down tax increases. Florida lawmakers reject the governor’s big tax cut plan, opting for more modest cuts and school spending increases.
– Carl Davis, ITEP Research Director
America’s own tax haven of Delaware approved huge tax breaks for Dow and DuPont in the hope that if the companies merge as planned, they will establish their new company in Delaware. In a move that will cost the state $14.1 million in lost revenue, the Delaware Senate passed a bill eliminating the $5 million aggregate cap on the research and development tax credit, and made the credit refundable. The bill passed unanimously and there was no debate. Senators also revived a never-used tax credit that rewards companies for establishing new headquarters in Delaware, expanding it to include in-state companies that retain jobs after a merger. The credit would be applied retroactively to the jobs retained under the Dow-DuPont merger. The bill is expected to swiftly pass the House. Meanwhile, lawmakers continue to consider a bill that would make the state’s Earned Income Tax Credit (EITC) refundable, but only after reducing it from 20 to 6 percent of the federal credit. To learn more about Delaware’s fiscal malfeasance, check out ITEP’s report “Delaware: An Onshore Tax Haven.”
West Virginia lawmakers have failed to come up with a solution to the state’s estimated budget shortfall of $238.8 million – an amount larger than initially expected because of the ongoing downturn in energy prices. Earlier this year legislators tabled a proposed gas and sales tax increases to pay for roads. After the West Virginia Senate approved a 3 cent increase in the state’s gasoline excise tax and a 1 cent increase in the sales tax rate, the House Finance Committee batted both measures down, arguing that the state’s public services can absorb more cuts. The House committee also voted down a Senate measure that would have increased the cigarette excise tax by $1 per pack. Gov. Tomblin has announced that he is sending legislators home and will bring them back later this spring to regroup and deal with the shortfall.
Florida Gov. Rick Scott’s billion-dollar tax cut failed to get a sympathetic hearing from legislators, who instead passed a modest property tax measure paired with more spending on K-12 education. The centerpiece of his plan, eliminating corporate income taxes for manufacturers and retailers, was swiftly rejected by the House. The Senate then pared the House version of Scott’s tax cut plan back to just $129 million in sales tax reductions for manufacturing equipment purchases and specific groups and products. The Senate also passed $400 million in local property tax cuts by assuming more state responsibility for K-12 funding. Florida’s per-pupil state spending on K-12 education will increase by 1 percent, a state record but anemic by national standards. House and Senate negotiators came together to present the governor with a final measure that largely followed the Senate proposal. There was speculation that Gov. Scott would veto the entire budget in protest, forcing the legislature into special session. Instead, the governor opted to veto $256 million from the budget.
States Ending Session:
Utah (March 10)
Washington (March 10)
Florida (March 11)
Virginia (March 12)
Indiana (March 14)
West Virginia (March 15, but will reconvene later this spring)
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