CTJ's Tax Justice Digest, April 4, 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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As the baby boom generation ages, tax breaks for seniors are becoming quite costly--but this isn't stopping state lawmakers from proposing costly new tax breaks for those over 65. Illinois lawmakers seem unrepentant about their budget-busting income tax exemption for all retirement income. One Connecticut lawmaker is proposing to follow in these pricey footsteps by proposing a similar tax break. But it doesn't have to be this way: find out how best to provide targeted tax breaks for retirement income in ITEP's policy brief here.
New York policymakers are moving quickly to dispose of a projected budget surplus, with an expensive new property tax rebate for homeowners. Meanwhile, gubernatorial candidate William Weld wants to exempt all New Yorkers earning under $75,000 from the state income tax-- an idea that has drawn immediate criticism for its flaws. Meanwhile, the reappearance of Oregon's automatic income and corporate tax rebate, the "kicker," serves as a stark reminder that policymakers should make sure their fiscal affairs are truly in order before frittering away "surplus" revenues. The Oregon Center for Public Policy has more on the kicker here.
Legalized gambling remains a controversial topic in state houses around the nation. Pennsylvania lawmakers have been wrangling over how to cut property taxes--and the extent to which slot machines should be used to pay for these cuts-- for several months.The Massachusetts House will vote this week on a bill, which has already passed the Senate, that would introduce 8,000 slot machines in the state's racetracks. And with the failure of a lawsuit alleging that North Carolina's new lottery represents an unconstitutional tax hike, stores began selling lottery tickets earlier this week. Observers argue that the new lottery is an unreliable and regressive revenue source.
The 1998 tobacco settlement has been a fiscal shot in the arm for state and local governments in recent years. Many states have used their share of the tobacco settlement to plug temporary budget holes, rather than asking the tough questions about how to reform their tax systems to ensure adequate revenues in the future. Now one local government is wondering where all the money went. And the states could soon be in for a rude awakening depending on the outcome of ongoing negotiations between cigarette manufacturers and the states: the manufacturers are seeking to reduce their next payment to the states by $1.2 billion.
New From CTJ: Even as federal lawmakers gear up to permanently repeal the estate tax, new data from the Survey of Consumer Finances shows that the real value of the median inheritance has fallen dramatically over the past thirty years--even as the value of the biggest inheritances has grown dramatically. And alarming new data from the IRS shows that fewer and fewer of the biggest estates are paying any tax at all. Check out CTJ's new analysis of the IRS data here.
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