The Tax Policy Blog

December 18, 2008

The California budget proposal suddenly brought to the floor by Democratic legislative leaders for a simple majority vote is probably unconstitutional, predicted Tax Foundation Tax Counsel Joseph Henchman.

"The first phase of the two-phase plan involves eliminating the gas tax and raising other taxes, the idea being that because the two taxes zero each other out, it's not a ‘tax increase' and can pass the legislature with a simple majority," Henchman explained. "The second...

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December 17, 2008

Governor Mark Sanford, Republican of South Carolina, and one of the few governors to be against the bailouts, has proposed a comprehensive tax reform package that includes a move to an optional flat individual income tax of 3.65% with no deductions starting in 2010, as well as a phase-out of the 5% corporate income tax over the next ten years. (Staff Economist Josh Barro goes into more detail in this December 9...

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December 17, 2008

Kentucky, like many states, is facing a budget shortfall, but of rather modest size. Out of a $19 billion two-year budget, the current budget has a $456 million hole with six months to go. Governor Steve Beshear (D) last week announced a plan to close it with very modest spending cuts ($147 million), using rainy day funds ($179 million), and a 233% hike in cigarette taxes ($81 million).

Kentucky residents today pay 30 cents per pack in state excise taxes, along with a 10...

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December 17, 2008

Pennsylvania is one of many states facing budget shortfalls. Last week Governor Ed Rendell proposed a plan to close the state’s projected $1.6 billion deficit. The plan includes no tax increases, but it does rely heavily on the proposal to bail out struggling state governments. The plan includes the following:

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December 16, 2008

New York has been aggressive in reaching beyond its borders to tax transactions occurring out-of-state. Back in May, forced to choose between keeping 3,400 New York-based advertisers and being forced to collect New York sales and use taxes on out-of-state sales, Overstock.com (a business with no property or employees in New York) fired the advertisers. Amazon.com is currently in litigation over the same law...

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December 16, 2008

Earlier this month, two state governors penned an op-ed opposing a bailout of state governments:

In Texas and South Carolina, we've focused on improving "soil conditions" for businesses by cutting taxes, reforming our legal system and our workers' compensation system. We'd humbly suggest that Congress take a page from those playbooks by focusing on targeted tax relief paid for by...

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December 16, 2008

The Tax Foundation takes on a lot of complicated issues: from the SILO deals that have many city transit agencies near default to calculating how the Presidential candidates' tax proposals would affect different definitions of "small business." But sometimes it's the simplest things that get us the most attention. 

A couple months ago, Senior Economist Gerald Prante...

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December 16, 2008

Investors who became victims of Bernard L. Madoff’s now infamous $50 million Ponzi scheme may get some relief through the tax code. The IRS allows taxpayers to deduct theft losses, as long as they exceed 10% of adjusted gross income. But as the New York...

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December 15, 2008

Illinois Governor Rod Blagojevich, undoubtedly on his way out of office this week either by resignation or impeachment, continues to head into work and denies that he will be stepping down. Today, he plans to sign into law a bill expanding Illinois's film tax credit. The new expanded credit will be...

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December 15, 2008

From here:

Governor Arnold Schwarzenegger and legislative leaders today announced the appointments to the Commission on the 21st Century Economy. The Governor has appointed Gerald Parsky as Chair and Ruben Barrales, Michael Boskin, John Cogan, Becky Morgan and Curt Pringle. The legislature has appointed Christopher Edley Jr., George Halvorson, Jennifer Ito, Fred Keeley, Monica Lozano...

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December 15, 2008

New York Gov. Paterson is looking for new revenue sources, some of which would move the state in the direction of better tax policy. But as is usual with politicians, he is looking at selective sources to raise revenues, including a tax on non-diet soft drinks.

Let's walk through the logic of such a tax. Just because a tax raises revenue is not a defensible reason to impose it. I could use that same logic by suggesting a tax on diet soda only or a tax based upon the number...

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December 15, 2008

Tax Counsel Joseph Henchman's maps have been receiving much attention. In addition to the Combined State-Local Sales Tax Map and the Beer Tax Map, Joe's Property Tax Map is being posted on plenty of sites, including Club for Growth, Roth...

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December 15, 2008

Borough officials in State College, PA, home of Penn State University and the PSU Nittany Lions, are considering adopting a tax on alcoholic drinks purchased at bars and restaurants. The borough is struggling to balance its $17 million 2009 budget, and the leading proposal is to implement an...

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December 12, 2008

A reader writes in with a research question:

I am trying to remember who said something in the original debates about federal income tax that it could never rise above a nominal percentage rate because the American people wouldn't have it... any idea?

Some background: The U.S. income tax first appeared as a wartime measure during the Civil War, and was levied at 3% of income over $800 from 1861 to 1872. It reappeared in 1894 at 2%...

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December 12, 2008

More love for the Tax Foundation from editorial, economic and state-based bloggers:

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Subscribe to Tax Foundation - Tax Foundation's Tax Policy Blog The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.

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