A big day in state taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. yesterday, good and bad:
Texas: The Texas House approved a reduction in the margin tax (modified gross receipts taxA gross receipts tax, also known as a turnover tax, is applied to a company’s gross sales, without deductions for a firm’s business expenses, like costs of goods sold and compensation. Unlike a sales tax, a gross receipts tax is assessed on businesses and apply to business-to-business transactions in addition to final consumer purchases, leading to tax pyramiding. on business) by 25 percent coupled with an increase in homestead exemptions in the property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. , sending the combined bill to Governor Abbott’s desk. A sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. cut, which had been part of earlier House proposals, was dropped from the final package.
Illinois: Governor Rauner’s package of local property tax freeze coupled with granting local autonomy on collective bargaining and prevailing wage laws was defeated by a key committee in a party-line 6 to 11 vote. Legislators had already killed proposed tort reform and workers compensation reform bills. Meanwhile, Democrats began passing a series of budget bills that spend about $3 billion more than projected revenue, over Republican objections. After I watched both of those happen in person, we unveiled our new chart book on Illinois’s economy and tax system. A millionaires tax proposal failed earlier in the week.
Nevada: A number of actions occurred as a Monday regular session deadline looms. The Assembly Tax Committee approved making permanent a package of temporary taxes enacted years ago and raising the cigarette tax by 80 cents per pack. A bipartisan bill to reform the problematic Live Entertainment Tax, by closing loopholes and reducing the rate on a revenue-neutral basis, faces likely committee approval today. In the biggest news, after furious lobbying by the Governor and gaming interests, Assembly Ways & Means Committee voted 11 to 4 to send Governor Sandoval’s revised tax plan to the Assembly floor. The revised plan fixes a number of flaws in Sandoval’s original proposal but still includes a gross receipts tax component. (Sandoval attacked the Tax Foundation for criticizing the flaws in his original proposal.) Among those voting no in committee was Rep. Derek Armstrong (R), the chair of the tax committee who had proposed an alternative that focused on fixing existing taxes without adding a new gross receipts tax. Many legislators remain uncomfortable with the structure of the tax package, however, so floor amendments are likely and any floor vote is still too close to call.
Louisiana: The Louisiana House approved a bill to phase out the state’s franchise tax over five years. This is viewed as balancing the earlier decision to haircut corporate tax credits by 20 percent to close this year’s budget gap. A proposal to raise the sales tax or gasoline tax for road needs failed.Share