CTJ's Tax Justice Digest, June 14, 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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Republicans failed last week to muster the 60 Senate votes needed to overcome a filibuster and consider fully repealing the federal estate tax. In the wake of the 57-41 vote, supporters of repeal like Senator Jon Kyl (R-AZ) are turning to so-called "compromise" legislation that would cost nearly as much as full repeal. One of the most frequent arguments made by opponents of the estate tax is that it threatens family farms. A new CTJ fact sheet takes a look at the special breaks enacted during the Clinton Administration that protect family farms from the estate tax.
Emboldened with new figures from the Joint Committee on Taxation, House Ways and Means Committee Democrats blasted the Republicans for their recent extension of capital gains and dividend tax breaks through 2010. According to the new figures, families with incomes below $50,000 will receive an average of $10 from these tax breaks while families earning over a million dollars a year get an average tax break of $65,000.
The House and Senate will mark up legislation this week that would give the President something resembling a line-item veto over laws passed by Congress. The White House's proposal would allow the President to hold up funds for a program approved by Congress for six months -- even if Congress votes to reaffirm the spending item in question. Alarmingly, the enhanced "line-item rescission" power could be used to gut spending programs but it could almost never be used to target tax loopholes for special interests. Click here for more.
Last week, South Carolina legislators finally decided on a property/sales tax swap compromise. Legislators came to an agreement that capped assessment increases, raised the sales tax rate, and lowered the sales tax rate on groceries. While this legislation certainly isn't ideal, the compromise is better than many alternatives legislators initially discussed. For a critique of the compromise legislation, click here. In New Jersey the stage appears to be set for a serious discussion about property tax reform. Starting next month, legislative committees will examine ways to reduce the state's notoriously high property tax burden. Advocates have varying expectations for the summer meetings.
As November elections approach, two states are grappling with the line between issue advocacy and political promotion. Washington's Supreme Court is hearing a First Amendment case determining the point at which the political speech of radio talk show hosts becomes political advertising that can be regulated by the government. Also, as an abortion-related ballot initiative looms in South Dakota, the IRS has warned religious leaders to steer clear of political activity this election year or risk jeopardizing tax exempt status.
Ten years ago the Pabst brewing company moved its corporate headquarters from Wisconsin to Texas. Now Pabst is pulling up stakes again, and relocating its headquarters to suburban Illinois. The state of Illinois is giving Pabst $1 million in tax breaks to ease the transition. In return, Illinois gets a total of 31 new jobs -- and the thrill of hosting one of the world's finest beers. Why the about-face? Tax-averse Governor Rod Blagojevich thinks the tax breaks have something to do with it, but Pabst executives aren't trying to conceal the fact that some more basic factors drove this decision. Compared to Texas, the Chicago area apparently has more accessible airports and a better-educated labor force -- and the CEO happens to live there. Thanks to the Illinois government's terrific new corporate accountability portal, lawmakers and the public will know, eventually, whether Pabst lives up to its job creation guarantees. To find out more about the best and the worst in state corporate tax subsidies, sign up for the new Subsidy Watch newsletter from Good Jobs First.
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