Tax Justice Digest stories about Washington
Given this long-term transition from one media platform to another, it's hard to see what this measure will accomplish, other than the waste of tax revenue. After all, if Governor Gregoire and other officials in
In the end, the inefficiency of this tax subsidy will probably only be matched by the irony it has achieved. As at least one observer has already noted, the
Nonetheless, talk of raising revenue in a progressive manner is especially encouraging coming from Washington state, where the idea of enacting an income tax has traditionally been greeted with hostility. As numerous economists have pointed out, raising taxes on more fortunate state residents is the best way to prevent cuts in the state services needed most during an economic downturn. Washington joins Illinois,Wisconsin,New York, Connecticut, and Delaware as states where progressive income tax increases have received serious attention.
For more on this topic, see the Economic Opportunity Institute's recent op-ed on "high incomes" taxes.
Thankfully, the Washington-based Economic Opportunity Institute presented more responsible ideas this week that add a much-needed progressive voice to the otherwise bleak landscape. Among their proposals are a variety of expansions in the state’s sales tax base, a tax on high-income earners, and a tax on oil companies’ profits.
Along similar lines, as Florida's budget situation continues to worsen, Republican legislative leaders have announced a special January session to deal with a $2.3 billion budget deficit for the current year. Options on the table include spending cuts and raiding trust funds -- but tax hikes have been explicitly ruled out by legislative leaders. Democratic lawmakers are showing renewed interest in hiking the state's cigarette tax -- even though the projected yield of such a hike has fallen dramatically in the last year. One editorial observer points out that avoiding sensible tax-raising solutions amounts to "eating the seed corn."
As the fiscal contagion spreads among the states, policymakers are clearly casting about for ways to close large and growing budget deficits. In Nevada, Governor Jim Gibbons may be open to tax increases in light of a shortfall that is projected to reach $1.8 billion over the next two and half years, but he has also floated the idea of 'voluntary' payroll reductions of 5 percent. New Hampshire faces an approximately $600 million budget gap over the same period, with lawmakers weighing such options as selling state properties, legalizing gambling, or deferring needed payments to the state pension fund. Florida may have to confront an eye-popping deficit of $6 billion over just 18 months, driving elected officials to think about raiding a variety of trust funds and imposing a 4 percent across-the-board cut in agency budgets.
Of course, these three states have more in common than difficult days ahead. They also share a steadfast refusal to levy a personal income tax. Rather than continue to cast about for half-measures and temporary fixes -- or, worse, policies that would undermine working families' already precarious economic situations -- policymakers in states like Nevada, New Hampshire, Florida, Washington, and Tennessee need to acknowledge the elephant in the room and consider whether the tax policies that brought them to this point are the ones that will carry them to a better future.
From coast to coast, state and local governments are coming face-to-face with the consequences of turmoil in the nation’s housing and financial markets, as tax collections are falling well short of expectations and are opening up substantial budget gaps. The country’s two
There are persuasive arguments on both sides as to whether this is a good idea. While a tax on disposable bags is inherently regressive, essentially an additional sales tax, many stores do offer cloth bags as alternatives to disposable ones or allow customers to bring their own. The city plans to provide all residents with a few reusable cloth bags for free. Another argument against the tax is it will require the purchase of disposable bags by many families who formerly acquired them for free to use as trash can liners, to transport food, and to pick up pet waste. This could diminish the positive environmental impact of the tax.
Supporters of the disposable bag tax say the tax provides a strong incentive for recycling which doesn’t exist when bags are free. For example, Los Angeles estimates that its residents use nearly 2 billion plastic bags per year and only about 5% are recycled. There is solid evidence that disposable bag taxes have a strong effect on consumer behavior.
Department stores are strangely exempt from the bag tax, even though they contribute nearly a quarter of disposable bag usage in
Whether
Advocates in Kentucky have long been pushing for the implementation of a state Earned Income Tax Credit (EITC). The EITC is a popular, targeted tax credit that offers assistance to working families. Similar credits have been enacted in 22 states and the District of Columbia. The House Budget Committee passed a bill that would introduce a credit equal to 7.5 percent of the federal EITC, coupled with a broader state estate tax. The bill will now go before the full House.
Policymakers in
The state of
In more low income tax relief news, the Idaho House Revenue and Taxation Committee voted this week to increase the state rebates offered to offset the state's sales tax on groceries. Currently Idaho residents receive a $20 credit as an offset to the sales tax on groceries (more for seniors). The proposal being debated in the House would provide increased and targeted tax relief. For example, the new expanded credit would offer $50 per family member if the family's income is less than $25,000. The value of the rebates would increase each year until the maximum credit of $100 is reached. By 2015 the proposal is expected to cost about $122 million. Read more about options states have to provide targeted tax relief in ITEP's policy brief.
