The scramble to curb rising gas prices is on – ITEP
State Rundown 3/16: The rush to curb rising gas prices is on
Rising gasoline prices have lawmakers across the country looking for ways to ease the strain on consumers, and nearly half of states are considering temporarily reducing or repealing their gasoline tax. Another hot idea, however, is the gas tax exemption, and this week ITEP’s Carl Davis explains why these holidays aren’t worth celebrating. Elsewhere, Republicans from Arizona appear to be gearing up for a special session in a bid to sidestep an electoral referendum that will determine the fate of a recently approved and highly regressive tax cut plan. In Caroline from the south, the Senate passed its own $2 billion tax cut that includes a cut to the top marginal rate and differs slightly from the House plan because it also includes $100 rebate checks. And while Georgia politicians are currently focused on a bill that would suspend the gas tax, the ITEP still has an eye on the regressive tax cut plans in the House and Senate and how the two chambers plan to reconcile bills.
Major State Tax Proposals and Developments
- A special session could be convened soon in ARIZONA, as Republican lawmakers aim to avoid a voter-led veto referendum that prevents the nearly $2 billion income tax cut plan they passed in 2021 from taking effect. The goal would be to repeal last year’s plan and replace it with a new tax cut bill, negating the need for voters to approve or reject the tax cut. Calls for a special session resumed after a Superior Court judge struck down Proposition 208, an election measure that would have raised taxes on the wealthy and used the revenue to fund education. – MARCO GUZMAN
- All eyes in GEORGIA seems to be on a gas tax suspension bill, but a more costly and permanent issue is the 5.25% fixed income tax bill recently passed by the House that would eliminate most itemized deductions, would increase the amount of tax-exempt income and cost over $1 billion. annually, mostly benefiting the wealthy. It remains unclear how the House and Senate will balance their tax cut plans. – KAMOLIKA DAS
- the MISSISSIPPI The Senate passed its amended version of the House proposal to reduce income tax. Compared to the Senate’s latest version, the plan would cut the top tax rate to 4.6% and include a 6-month gas tax suspension. The updated house plan still eliminates state income tax, though it implements a slower elimination via exemptions. The plan also includes a reduction in the state tax on groceries, but much more slowly by just 0.25% per year, reaching 4% by 2034. The House plan no longer includes the reduction in car tag fees or increased sales tax. Both plans are significantly more expensive than their respective previous iterations and are steeply angled upwards. House and Senate leaders are expected to hold final negotiations later this month. – KAMOLIKA DAS
- Senators in CAROLINE FROM THE SOUTH unanimously passed a $2 billion tax cut bill that would cut the state’s top tax rate from 7 percent to 5.7 percent and reduce the state’s property tax State on the manufacture of 9 to 6%. The bill also includes $100 minimum refund checks for filers. The House unanimously passed a similar plan that did not include refund checks. –NEVA BUTKUS
Annual Governors’ Addresses and State of the State Addresses
- LOUISIANA John Bel Edwards announced that his budget will include salary increases for teachers, salary increases for higher education professors, funds for early childhood education and salary increases for the forces of the order and first responders in his state of the state address.
- the ALABAMA The Senate has approved a bill that would eliminate the state business lien tax, the minimum tax levied on certain corporations and business trusts, at a cost of $23 million a year. The legislator is also likely to adopt tax breaks for pensioners who depend on defined contribution plans and an increase in the standard deduction. Five bills have been introduced to reduce the tax on groceries, but these proposals have yet to move forward.
- FLORIDA Lawmakers passed a budget that included two new tax exemptions this year — the sales tax exemption on skilled worker tools and a month-long gasoline tax exemption in October. Fortunately, a corporate tax break bill that would have cost the state $3.5 billion over the next few years ultimately did not pass.
- The defenders of ILLINOIS are pushing for an extension of the state working income tax credit and the creation of a state child tax credit.
- the KANSAS The House Tax Committee introduced a bill that would reduce the state’s general sales tax to 6.3% and the grocery sales tax to 3.5%. Kansas currently has a 6.5% sales tax; food products are taxed at the full rate.
- A state senator in LOUISIANA hopes to make temporary reforms to the state’s Industrial Tax Exemption Program – ironically sharing the same acronym as ITEP – permanent. Before Governor John Bel Edwards took office, an unelected state board could automatically approve local property tax exemptions for manufacturers without the approval of revenue-losing municipalities.
- MARYLAND Larry Hogan and legislative leaders announced a month-long gas tax suspension, costing the state nearly $94 million, but the measure is unlikely to significantly benefit Marylanders. living paycheck to paycheck.
- MICHIGAN Republicans have sent their $2.5 billion tax cut plan to Governor Gretchen Whitmer who plans to veto the bill. The plan reduces the flat state tax rate from 4.25% to 3.9% and adds a significant additional exemption for retirement income.
- Sales and gambling tax initiatives to improve education funding will not appear on NEVADA ballots in November after all, following a judge’s ruling on the matter. The measures were originally created by the Clark County Education Association, which tried to withdraw them after reaching an agreement to legislatively increase some of the projected revenue, but there was disagreement over whether the secretary of State could legally remove them from the ballot.
- NEW HAMPSHIRE Chris Sununu proposed temporarily suspending the gas tax as well as the room and meal tax.
- A NEW JERSEY bill would cut the gas tax in half if the average price of a gallon of regular unleaded fuel reached $4.51 and drop it altogether if it exceeded $5.50.
- NEW YORK lawmakers seek to improve the EITC to bring the state in line with best practices recently adopted in other states to extend credit to more workers without children and without a Social Security number.
- Jon Echols, House Majority Leader, in OKLAHOMA proposed a bill that would create a 100% tax credit for parents’ donations to their child’s teacher up to $1,000. The bill would set up an anonymous system where parents could deduct their donations. The credit would be capped at $5 million per year. The bill was passed in the House.
- OREGON Cannabis revenues continue to rise and state plans to expand ability for cities to increase local rates.
- Some PENNSYLVANIA lawmakers also introduced legislation to reduce the gas tax, using federal funds to replace lost revenue.
- TENNESSEE Democratic lawmakers have also proposed suspending the gas tax for 90 days.
- VIRGINIA lawmakers ended their regular legislative session without passing their biennial budget and numerous other bills. The House and Senate failed to reach an agreement on the tax cuts, so Governor Glenn Youngkin is expected to call a special session.
- VIRGINIA Glenn Youngkin also announced plans to introduce emergency legislation to suspend state gasoline taxes for three months, but a similar proposal was rejected by lawmakers earlier this year.
- WASHINGTONThe legislative session of ended without major fiscal action. The new state payroll tax for long-term care was delayed a year earlier in the session, a movie tax subsidy was increased and lawmakers rejected a flawed proposal to exempt the tax sales over the past week.
- the WEST VIRGINIA The General Assembly passed a state budget without the 10% income tax cut proposed by the House. However, part of the state surplus can be used for future tax cuts. In other news, lawmakers have advanced a proposal to eliminate the soft drink tax.
What we read
- A revealing study published last month that has gained more attention recently found that CaliforniaProposition 13, long known for creating inequitable gaps between established homeowners and new buyers, also disproportionately benefits white and wealthy households over homeowners of color and low-income households. This is primarily because white homeowners’ homes appreciate faster, rapidly increasing their benefit from the Proposition 13 valuation freeze, while homeowners of color see their home’s value and savings increase. tax increase much more slowly.
- A recent article in Law & Society Review argues that some of the ways we think and talk about taxes, particularly centering “taxpayers,” lend themselves to what the author calls “taxed racism,” in which “ostensibly fiscal concerns are interwoven with political right of white people that erodes aboriginal legal and political rights”. sovereignty.”
- Whitney Tucker and Coty Novak at Center on Budget and Policy Priorities examine the relationship between state tax cuts and voting restrictions that deepen inequality and how both are rooted in our nation’s history.
- the Center on Budget and Policy Priorities shared an insightful blog post highlighting the impact of the expanded Child Tax Credit and Earned Income Tax Credit on poverty reduction in Puerto Rico.
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