CTJ's Tax Justice Digest, March 20, 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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Swimming against a national tide, Iowa lawmakers chose last week to scale back their reliance on gambling to fund public services. Gov. Vilsack has said he'll sign a bill that would ban the recently introduced video gaming terminals that have cropped up in convenience stores and bars around the state in the past year. Some lawmakers are asserting that the state's Lottery board exceeded its revenue-raising mandate in introducing the video machines, while others are likely reacting to the groundswell of public opposition to new data showing that the machines are used most heavily in low-income areas. More links and discussion on the Talking Taxes blog.
If Senator Brownback (R-KS) has his way, Washington DC will be used as a "laboratory" to test his voluntary flat income tax proposal. DC policymakers are wary of the idea but weren't invited to testify at the Senate hearing. For more on this unfair and potentially complicated proposal check out the Talking Taxes blog.
In the wake of Hurricane Katrina, state and federal lawmakers are mobilizing to rebuild New Orleans as quickly as possible. But Oklahoma lawmakers appear not to have gotten the memo. The Big Easy's professional basketball team, the Hornets, has been playing its games in Oklahoma City while the hurricane cleanup is underway. Now Oklahoma lawmakers, in the words of one miffed Louisiana commentator, have gone "from being good hosts to doing whatever necessary to keep the Hornets permanently." State lawmakers have enacted a sales tax exemption for tickets to professional basketball games in a naked effort to keep the Hornets from returning to New Orleans. As it happens, Louisiana law already contains the same exemption, so Oklahoma's tax break is just leveling the playing field between the two states. But this is exactly the sort of "economic war between the states" that the ongoing Cuno Supreme Court corporate tax break case will hopefully resolve. For those who missed the fireworks two weeks ago, a transcript of the Court's Cuno debate is now available here.
The Wyoming Legislature and Governor have agreed to a temporary, two-year repeal of the state and local sales tax on groceries. The legislation includes a provision to hold local governments harmless by reimbursing them for their lost sales tax revenues. Though repealing the sales tax on food would provide relief to low- and middle-income taxpayers, outright repeal of the sales tax on food is a poorly targeted method of relief. For more about how states can provide targeted sales tax relief read ITEP's policy brief.
The New York Times reports that electric utility companies in at least 26 states are collecting billions of dollars from their customers for corporate income taxes--and then keeping the money rather than sending it to the government. Since taxes on consumer utilities tend to hit low-income taxpayers especially hard, this finding should give pause to advocates of greater state and local tax fairness.
Federal corporate tax avoidance is a growing problem, as a series of CTJ/ITEP reports have documented. But the profitable Fortune 500 corporations that benefit most from corporate tax loopholes have fought vigorously to oppose greater disclosure of the tax breaks they claim. Now IRS Commissioner Mark Everson wants to change all that. In a speech this week, Everson suggested public disclosure of tax breaks could "improve compliance" with corporate tax laws. Read the full text of Everson's speech here.
For those who have been asleep for the past three months, Congress is debating extending temporary tax breaks for capital gains and dividends. A new Citizens for Tax Justice analysis shows that the wealthiest 1% of Americans enjoyed 70% of all capital gains income eligible for this tax break in 2005.
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