The Tax Policy Blog

January 12, 2017

Illinois continues to struggle with its budget. The state’s most recent stopgap budget expired on December 31, 2016. To perhaps break up the political logjam, Illinois senators of both political parties have begun negotiations on a...

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January 11, 2017

State-level taxes may be the most visible source of state government revenues for most taxpayers, but it’s important to remember that they are not the only source of state revenue. State governments also receive a significant amount of assistance from the federal government in the form of federal grants-in-aid. Aid is given to states for Medicaid, transportation, education, and other means-tested entitlement programs administered by the states. 

States differ in the amount of federal...

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January 11, 2017

On January 4, Indiana legislative leaders unveiled a plan to raise fuel taxes by 10 cents per gallon, increase the vehicle registration fee by $15 per year, and create a $150 per year fee on electric vehicles. All told, the plan would raise $300 million per year, costing the average Hoosier...

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January 10, 2017

Last Friday, Maine Governor Paul LePage released his biennial $6.8 billion budget. Under his new budget, LePage introduces several changes to the tax code, including changes to individual income taxes, corporate taxes, the sales tax, and the elimination of the estate tax.

One major reform proposal in the state’s tax code would be the adoption of a flat income tax rate of 5.75 percent...

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January 09, 2017

A lot of tax discussion recently has focused on foreign exchange rates and border adjustments. Rather than talk about difficult abstractions, I thought it might be helpful to think about things in terms of a real physical business and its real physical outputs.

What follows, I hope, will help show how real businesses that do international trade interact with each other, and how that all relates to recent policy proposals.

Suppose that I am in the furniture business. Suppose my...

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January 09, 2017

With the elections over and Donald Trump the President-elect, the question becomes how Trump can fulfill his campaign promises. One of his promises is job growth in the U.S. But in an economy where below 2 percent growth has become normal, Trump will have to think creatively about stimulating the economy. Republicans have specifically said that the government should not pick winners and losers by giving tax credits to specific industries.

But what if the government could invest in...

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January 04, 2017

On January 1st, the controversial Philadelphia soda tax took effect. It is levied at a rate of 1.5 cents per ounce, which is 24 times the tax levied on beer in the state of Pennsylvania. This stark new tax has prompted a few interesting reactions on Twitter as customers are starting to see just how large the effects...

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January 04, 2017

States compete with each other in a number of ways. Attracting (and retaining) new residents is one of the areas of competition.

To help quantify where individuals move, United Van Lines, the largest moving company in America, releases a report each January compiling its client data for the previous year. By comparing the number of inbound moves to the number of outbound moves, United Van Lines data...

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December 30, 2016

The new year is just a matter of hours away, and once we ring it in, several states will be implementing changes to their tax codes. One of the places we will be seeing a lot of action is in corporate income taxes, where many states are continuing to phase in multi-year reductions and reforms.

Five states will reduce their corporate income tax rates in 2017:

  • North Carolina will reduce its corporate tax rate from 4 percent to 3 percent on January 1, as a...
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December 22, 2016

Over the past two years, Washington’s legislature and voters have rejected a capital gains tax, a carbon tax, and an increase on gross receipts taxes on services. In his new budget, Gov. Jay Inslee (D) chose to serve up all three with a proposed budget package that would increase revenue by $4.4 billion in the first biennium even though the two largest components—worth at least $2.7 billion—don’t even kick in until the second year.

We will consider all of these provisions at greater...

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December 21, 2016

An obvious example of tax triggers working as designed is when a portion of revenue growth is automatically put toward tax relief. A less obvious, but equally important, example of triggers doing what they’re intended to do is when a scheduled tax cut is delayed because state revenues are inadequate to support it.

Tax triggers, for the uninitiated, are a series of tax reductions or tax policy changes implemented over time subject to meeting pre-established revenue (or similar)...

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December 20, 2016

Even after St. Louis taxpayers were stuck with the bill in 2015 when the NFL’s Rams left for Los Angeles, city officials are now looking to finance a new $200 million stadium in the effort to attract a Major League Soccer team. 

St. Louis Mayor Francis Slay, a supporter of the stadium plans, offered separate tax proposals that he hopes to have taxpayers vote on in April....

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December 20, 2016

UPDATE: The Council voted 5 to 8 to reject the mandate alternative and stick with the tax version, and then 9 to 4 to pass the tax version. It now goes to the Mayor for her signature or veto.

The Council of the District of Columbia gavels into session this morning to consider two options for paid family leave.

...

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December 15, 2016

Over the last couple of weeks there have been a few questions raised regarding the economic impact of a border adjustment, which is a significant base broadener in the House GOP’s Blueprint. Specifically, import-heavy companies have raised concerns about a policy that no longer allows them to deduct a significant amount of their business expenses. This concern has been echoed in two recent research reports, one by Goldman Sachs and another by RBC Capital, and in a letter penned by a number...

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December 14, 2016

Following the resounding defeat of Measure 97 in Oregon, the state faces a large budget deficit for its next biennium. A number of revenue increases are expected to be considered during the state’s legislative session, which begins in February. However, Our Oregon, the group that pushed for...

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