CTJ's Tax Justice Digest, February 22, 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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Tax relief for fixed-income elderly taxpayers is one of the most popular ideas in the state tax world right now. Iowa lawmakers are considering an extreme approach to elderly tax relief: completely exempting the pension and Social Security benefits of all elderly taxpayers from tax. The Des Moines Register correctly identifies this as a poorly targeted, budget-busting approach to tax relief. Also, this issue has caught the attention of candidates in the upcoming gubernatorial election. For more on the Iowa debate over taxing retirement income, check out the Talking Taxes blog here and an analysis from the Iowa Policy Project.
Georgia lawmakers have been bad-mouthing illegal immigrants for the additional costs of public services they require. But a new report from the Georgia Budget and Policy Institute reminds us that undocumented workers contribute substantial amounts in state and local taxes--and that these taxes tend to hit low-income taxpayers most heavily. Here's an article about the study from the Atlanta Journal Constitution.
This week, two states look back on the impact of previously enacted property tax caps. The Massachusetts tax cap, Proposition 2 1/2, turned 25 this year; the Patriot Ledger looks at its impact. Florida's Amendment 10 tax caps are showing their age as well, according to this Miami Herald article. Read more about it on the Talking Taxes blog.
Oil-company profits are making news, and provoking policy responses. The New York Times reports that the Bush Administration and House Republicans are trying to defeat a windfall profits tax proposal that passed in the Senate last year. At least three states, Alaska, California, and Washington are considering windfall profits tax legislation this year. .
In Utah and Rhode Island, "flat tax fever" continues to gain momentum. In Rhode Island, one of the major components of a House bill that would completely revamp the state's tax structure is an optional flat-rate income tax. meanwhile, policymakers in Utah continue to debate the particulars of a flat tax proposal there.
Oklahoma lawmakers may face a budget surplus this year, but a new poll there shows that Oklahoma voters would rather save the surplus than use it for tax cuts.
Utah gets two mentions in our digest this week because removing the sales tax on food is also in the mix there. Depending on the specifics of the plan being discussed, removing the sales tax from food could cost upwards of $166 million a year. In Mississippi, Governor Haley Barbour recently vetoed a bill that would remove the sales tax from groceries completely and replace the lost revenue through a cigarette tax hike. The Mississippi Senate was unable to override the veto and now a compromise is being discussed.
Governor Bob Riley, author of an ambitious but failed 2003 tax reform plan, is back. This time he's coming forward with a plan that cuts taxes for those who are most in need. However, Riley's proposal provides no new revenue sources to pay for the cuts.
CTJ's reports that the Congressional Budget Office projects the federal government will have to borrow $8.5 trillion over the next decade. Take a look at these startling findings here. Also, you are likely to hear more debate in the coming days about the impact of extending the President's capital gains and dividend tax cuts. CTJ's analysis shows that 78% of Americans will receive no benefit from extending these tax cuts.
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