CTJ's Tax Justice Digest, March 3, 2006Welcome to CTJ's Tax Justice Digest, our regular survey of new and interesting trends in state and federal tax policy. Click here to browse through archived editions of the Digest. |
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Property taxes are on the agenda in Georgia, where a House committee has unanimously approved a "property tax cap" measure that would restrict the annual allowable growth of property value to 3% or inflation, whichever is less. A new analysis by the Georgia Budget and Policy Institute lays out the difficulties with this approach and discusses more sensible reform alternatives. Press coverage of the proposal can be found here, and the legislation is here.
Utah’s regular legislative session ended with a bang this week. Lawmakers reduced the state sales tax on food by 2 percent (they had earlier discussed completely exempting groceries) and expanded their property tax “circuit breaker” credit. Check out the circuit breaker legislation here; an ITEP policy brief on circuit breaker best practices is here. The session ended without enacting the “flat tax” that has dominated legislative discussion this year, but lawmakers will be back for a special session in May to take another swing at the flat tax.
The Supreme Court heard oral arguments this week in a case that could help stop the widespread and irresponsible use of costly state corporate tax incentives. In the Cuno v. DaimlerChrysler case, the Court will decide whether a federal appeals court was correct when it ruled in 2004 that an Ohio investment tax credit given to DaimlerChrysler violated the U.S. Constitution’s Commerce Clause. If the Court agrees that these special corporate tax breaks impede interstate commerce, it will be an important first step toward revitalizing state corporate income taxes, making it at least somewhat more difficult for states to engage in "smokestack chasing" corporate tax breaks. Good Jobs First offers a first-hand account of the Court’s hearing here. A good overview of the issues surrounding Cuno can be found here. This article chronicles the destructive "tax break tug of war" between the states that the Cuno case might help prevent. And for a stark reminder of why state corporate tax breaks pose a danger to state governments, check out this ITEP report.
When state lawmakers enact local property tax cuts, locals need to ask if they'll be reimbursed for their lost tax base-- and then they need to ask again the next year. That's the lesson from South Carolina's current property tax woes, according to one long-time observer. Meanwhile, a House-passed proposal to further cut South Carolina property taxes--and pay for it with a 2-cent hike in the state's sales tax rate-- appears to be foundering in the Senate.
In Texas, a state court decision mandating school finance reform is casting its shadow over the ongoing gubernatorial campaign, with one Democratic candidate arguing that an income tax is needed to adequately fund schools (Texas is one of nine states without a broad-based income tax). Meanwhile, a new survey suggests that Texans would support a tax hike for adequate school funding.
Illinois Governor Rod Blagojevich has renewed his first-term "no new taxes" pledge as the 2006 gubernatorial campaign heats up in that state. But there is growing evidence that the state's tax system is simply inadequate to fund public services, as documented by a recent Center for Tax and Budget Accountability report. And it seems increasingly likely that Blagojevich will face unexpected opposition because of his tax pledge.
In Washington, the Bush administration is attempting to quietly push through another hike in the federal debt limit. A New York Times editorial points out that it shouldn't have to be this way. Meanwhile, it appears that the newest casualty of the Bush tax cuts may be the Survey of Income and Program Participation, a two-decades-old Census survey that is useful for documenting the impact of anti-poverty programs. More than 400 researchers have signed a letter opposing this proposed cut.
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