Lunch Links: North Carolina Boosts Standard Deduction; Bag Tax Impact Mixed; July State Tax Changes

July 5, 2016

Today is July 5, the 58th birthday of cartoonist Bill Watterson, creator of Calvin and Hobbes (1985-95). There are so many good C&H strips, but I suppose I should link to the one that lightly pokes fun at the IRS.

Here are some interesting links I came across:

  • Analysis of the House Republican Tax Plan: Our new report looking at the plan is out. Also see coverage from The Wall Street Journal, Politico, and The Hill. (Tax Foundation)
  • GAO Looks at Overpaid Tax Credits: The Government Accountability Office calculated overpayment error rates for the Earned Income Tax Credit (29 percent), the Child Tax Credit (12 percent), and the American Opportunity Tax Credit (25 percent). The overpayments total $29.5 billion per year, and the GAO says the credits’ complexity and difficulty of verification are to blame. (TaxProf)
  • Olympic Medal Tax Break Up Again: With the Summer Olympics in Rio around the corner, Reps. Blake Farenthold (R-TX) and G.K. Butterfield (D-NC) are pushing a bill to exempt the prize money that medal winners get from federal income tax. Gold medal winners get $25,000, silver medal winners get $15,000, and bronze medal winners get $10,000. (Roll Call)
  • North Carolina Approves Budget: The approved budget includes an increase in the standard deduction, the amount of a taxpayer’s income not subject to income tax, effective this calendar year. The current standard deductions of $7,500 (single) and $15,000 (married filing jointly) will rise immediately to $8,000 (single) and $16,000 (married filing jointly), and rises again for 2017 to $8,750 (single) and $17,500 (married filing jointly). The state also changes service apportionment to market sourcing, and provides clarification when sales tax is due on repair, maintenance, and installation services. (Raleigh News & Observer / North Carolina General Assembly)
  • Pennsylvania Still Debating: While Pennsylvania approved a record $31.6 billion budget (a 5 percent boost over last year), they didn’t agree on how to pay for the increase. The parties are as much as $150 million apart. (News Works)
  • Bag Tax Impact Evaluated: Montgomery County, Maryland, imposed a 5-cent tax on disposable shopping bags in 2012. Four years later, some mixed results: plastic bags are issued less at convenience stores, pharmacies, and department stores, but are growing at grocery stores. Plastic bags trapped in streams have dropped 9 percent, from 856 in 2011 to 777 in 2015, but only 281 so far this year. Proponents can claim victory either way: if bag usage doesn’t go down much, it raises revenue. The tax has raised $10.4 million since going into effect. (The Washington Post)
  • Illinois Topless Bar Tax Generating $500K a Year: In 2013, Illinois imposed a tax on businesses with adult live entertainment. The tax, either tiered-based on gross receipts or $3 a head, generates about $532,000 a year, barely half the original projection. The money goes to rape crisis centers. A similar tax in Nevada survived a constitutional challenge but one in Texas was struck down. (ABC / Associated Press / Tax Foundation)
  • State Tax Changes Taking Effect July 1: We have a rundown. (Tax Foundation)

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