CTJ's Tax Justice Digest, June 7, 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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This week the US Senate may be voting to repeal or drastically reduce the estate tax. Last Friday, the IRS quietly released new data showing estate tax payments by state for 2004. The data provide timely (but heretofore unnoticed) new evidence that the federal estate tax is all but irrelevant to residents of each state. CTJ has released easy-to-understand one-page fact sheets for all 50 states describing the new data, and showing the decline in estate tax payments in each state since 1998. To view a document describing details from all the states click here. To see a fact sheet for your state, click here.
If confirmed by the Senate as expected, Henry Paulson, the Goldman Sachs CEO nominated by President Bush to be his new Treasury Secretary, will be charged with steering the American economy through potentially dangerous waters at a time when the national debt continues to balloon. The CBO and Goldman Sachs have seperately revised their federal deficit projections downward from around $375 billion to perhaps as low as $300 billion, but this still shows deficits piling onto a national debt that is growing faster than GDP. Meanwhile, inflation, long-term interest rates and the trade surplus are all going up while the value of the dollar is going down. Paulson is known for his independence and many observers are eager to see how he will react to the borrow-and-spend policies that are digging a deeper hole for the economy. .
These days it seems that legislators would rather raise user fees than confront long term needs. Missouri lawmakers are increasing fees on convicted drug dealers, boaters, and landowners in order to fund government services. Meanwhile, New Jersey Governor Jon Corzine has a controversial budget proposal that includes raising fees on prescription medication. Some in Mississippi already see the error of depending on fees to fund higher education needs. This editorial from the Clarion Ledger argues that when lawmakers take a "no new taxes" stance, it's college students who are left holding the bag.
In Pennsylvania, Republican gubernatorial candidate Lynn Swann has proposed a property tax cap as part of his election platform. Swann's plan is based on California's Proposition 13: it would freeze taxable property values at the time of purchase, and would cap the allowable annual growth of property tax collections. The Philadelphia Inquirer is skeptical.
Is foie gras the engine of state economic growth? New York lawmakers appear to think so. As part of their Empire State Development Coporation (ESDC), a farm that force-feeds ducks to expand their livers in the production of foie gras received a $420,000 grant in hopes of boosting the local duck-stuffing industry. The payoff for the New York economy includes two brand-new manure treatment facilities. As a result of this apparent abuse of ESDC funds, New York State Senator Liz Krueger is pushing legislation, Senate Bill 2414, that would hold businesses accountable for the state handouts they receive in the name of economic development. For more on best practices in economic development incentives, check out the Good Jobs First website.
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