Tax Policy

On Friday, the U.S. Senate invoked cloture on the Marketplace Fairness Act and set May 6th as the day that the Senate will take final action. The Act would allow states to require all out-of-state sellers not qualifying for a small-seller exception to collect sales and use taxes.

 

Stateline Midwest ~ April 2013

Plans in 2013 include expanding sales tax base, raising severance tax, cutting income taxes and adding tax brackets

Sen. Beau McCoy calls it a once-in-a-generation opportunity for himself and other Nebraska policymakers: the chance to pore over the state’s entire tax structure, and reform and modernize it.

But as he has already found after introducing an overhaul this year, there are reasons why major shifts in tax policy sometimes occur only once every few decades.

“The more we, or at least I, spend on this, the more you realize how difficult it is for states to make big changes to their tax structures,” he says. “There are so many moving parts.”

Stateline Midwest ~ March 2013

Three states in the Midwest, Illinois, Iowa and Minnesota, allow income tax credits or deductions for parents and guardians of students in elementary and secondary schools. 
Iowa and Indiana offer a tax credit for charitable contributions to nonprofit scholarship-funding organizations.

The recent report by the Institute on Taxation and Economic Policy (ITEP) assessed the fairness of state and local tax systems among 50 states. The report identified ten states as having the most regressive overall tax systems. The ITEP identifies these states as “Terrible Ten” states, where the bottom 20 percent pay up to six times as much of their income in taxes as their wealthy counterparts. Washington State is the most regressive, followed by Florida, South Dakota, Illinois, Texas, Tennessee, Arizona, Pennsylvania, Indiana, and Alabama. That is largely contributed to heavy reliance on sales taxes, which burdens the bottom 20 percent more than the top 1 percent. 

State fiscal conditions continued to improve in 2012, although many state budgets have not recovered to prerecession levels. Revenues from corporate income taxes remain down nearly 25 percent over 2008 levels when adjusted for inflation. Between 2008 and 2012, three states—Illinois, Oregon and West Virginia—raised corporate income tax rates, while five states— Kentucky, New York, North Dakota, Massachusetts and Maryland—lowered rates. During this same time period, states had to rely less on corporate income taxes in their general fund budgets; revenue from those taxes are estimated to make up about 6.4 percent of general fund revenue in 2012, lower than the 7.6 percent they comprised in 2008.

Voters across the country made ballot decisions in the November elections that will have fiscal implications for years to come in many states. Ballot measures proposed a number of tax-related changes, including sales and income tax increases, caps on certain taxes—particularly property taxes—an increased ability for legislatures to provide tax breaks to individuals and businesses, and a requirement that new state taxes be passed by a supermajority of the legislature or go to the voters.

Stateline Midwest ~ October 2012

State-by-state overview of state farmland taxation laws and formulas »

It is the single largest source of revenue raised by local governments (two-thirds of the total), and the single largest tax paid by farmers (44 percent of the total). The property tax is the lifeblood of rural schools and other critical public services, but can also be a burden on agricultural producers: Across the United States, the equivalent of one-fifth of the gross sales produced by farmland is paid in property taxes each year. 

Such costs can impact the stability of many farms, particularly in a period of income shortfall such as the one encountered by some farmers in the Midwest during the drought of 2012. State legislators are ultimately responsible for finding the balance that works, an agricultural taxation formula that sustains both rural communities and their farmers.

Stateline Midwest ~ September 2012

Over the past five years, state funding for Illinois’ 32 rape crisis centers has declined by 28 percent. State lawmakers took actions in 2012 to reverse that trend, by creating a new revenue source that will be dedicated to funding these centers. The “skin tax,” as it is sometimes called, imposes a $3 per patron surcharge on strip clubs that serve alcohol or a flat fee based on a club’s taxable receipts.

Stateline Midwest ~ April 2012

Supporters of killing off so-called “death taxes” have had two notable legislative successes in the Midwest over the past two years — passage of a bill in 2011 to end the estate tax in Ohio, and Indiana’s decision in 2012 to phase out the inheritance tax. Indiana and Ohio are two of the six Midwestern states that levy either an inheritance tax or an estate tax.

Stateline Midwest ~ July/August 2012

Nationwide, property taxes account for about one-third of total state and local government revenue. They could have been abolished this year in North Dakota in one fell swoop — via a proposed constitutional amendment that appeared on the June ballot.

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