The Tax Policy Blog

January 07, 2009

We have updated our State Individual Income Tax Rates table for 2009. Some notable changes from 2008:

  • Maryland added two rates, including a 6.25% rate on income over $1,000,000.
  • Ohio reduced all nine of its income tax rates for 2009. Tax reform measures enacted in Ohio in 2005 included a 21 percent reduction for all income tax rates, phased in over a five-year period from 2005 to 2009. 2009’s rates...
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January 07, 2009

As the 111th Congress starts, the Democratic majority is proposing to reauthoirze the State Children's Health Insurance Program (SCHIP), which might include increased funding and expanded coverage, from children in families making twice the poverty level to possibly three or four times the poverty level. All of this would be paid for by an increase in the federal cigarette tax from 39 cents for $1 per pack. Phil Kerpen, Director of Policy for...

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January 07, 2009

I noted last month that a rush budget package rammed through by the California Legislature was probably an unconstitutional way to get around the two-thirds requirement:

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. The second...

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January 06, 2009

So part of Barack Obama's stimulus plan is this, as explained in today's New York Times:

To encourage businesses to expand their workforces and operations, Mr. Obama wants a tax credit for each new job created. During the campaign, he proposed $3,000 for each new job. Advisers said he is now also trying to figure out a way to give...

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January 06, 2009

A humorous article from today's St. Petersburg Times discusses Florida's entry into Powerball. Florida is the last state, among those that have lotteries, to join a multistate game such as Powerball or Mega Millions. Like legislators in other states, Florida policymakers are not content with the huge amount of revenue the lottery is bringing in already.

An excerpt from the article:

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January 06, 2009

So the National Taxpayers Union (NTU) wrote a letter to Tennessee congresswoman Marsha Blackburn in support of her proposal that would allow taxpayers to write off both state income taxes and state sales taxes on their federal income tax each year. In it, they use arguments that actually make the case against the state and local deduction.

Case 1:

By ending the "either/or" choice for itemizing...

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January 05, 2009

Allegheny County Judge Judith Olson issued an injunction against the county on Friday which limits the use of the county’s alcoholic drink tax revenue exclusively to Port Authority projects. This means that county officials will not be allowed to use any of the revenue to fund road or bridge projects.

A year ago Allegheny County started collecting a new 10% tax on alcoholic drinks...

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January 05, 2009

The IRS sent James Howarth a bill for 5 cents and demanded he pay. Then they sent him a refund notice for 4 cents but said he'd have to request payment since it was under $1. He tried to call to sort it out but couldn't get a live person. Now he doesn't know what to do. Just stamping the envelope is 42 cents, after all.

Hat tip:...

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January 05, 2009

This morning, the New York Times and the Wall Street Journal outlined President-Elect Barack Obama's economic stimulus package worth anywhere between $675 billion to $775 billion, both news organizations saying that the tax cut proposals are there largely to woo Republican support for the entire plan. The NYT's Peter Baker and Carl Hulse describe individual income side...

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January 04, 2009

I recently appeared on C-SPAN's Washington Journal to discuss the economic situation facing the states and how individual states are dealing with budgets and related tax issues. Click here to watch the video.

Below is each state's situation in more detail; these blog posts have been going up over the past two weeks and here they are all together. Stay tuned for more analysis and reporting on...

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January 03, 2009

Arkansas Gov. Mike Beebe (R) has introduced a balanced $4.4 billion budget, including $145 million in unfunded spending, and a $30 million cut in the sales tax on groceries from 3 percent to 2 percent (the general sales tax is 6 percent). The budget also proposes adding $120 million to the state's rainy day fund over the next two years.

More...

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January 03, 2009

Negotiations recently broke down between Arizona Gov. Janet Napolitano (D) and the legislature over $400 million of spending cuts to the $9.9 billion budget. Officials estimate a $1.2 billion shortfall. In the last five years, Arizona's government spending has grown at twice the rate of inflation and population increases...

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January 03, 2009

Alaska Gov. Sarah Palin (R) has proposed a 7 percent spending cut in the $11.2 billion budget to close a $402 million shortfall (the comparison does not count $746 million in checks mailed out last year from windfall profits tax proceeds). Alaska's general fund derives much of its revenue from oil revenue and taxes, and the budget assumes...

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January 03, 2009

Alabama Gov. Bob Riley (R) has announced hiring freeze (reducing state workers from 39,000 to 36,000); a ban on merit raises; travel curtailment; and a cut to spending in a targeted manner by 10 percent. Education, which faces a $795 million shortfall, will be cut across-the-board by 12.5%,...

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January 02, 2009

In mid-December, Delaware Gov. Ruth Ann Minner (D) announced $55 million in budget reductions to partly reduce a $109 million shortfall in the current $3.4 billion budget, including a $23 million accounting trick shifting Medicaid payments from the end of the month to the beginning. The...

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