CSG Midwest
In 2015, lawmakers in North Dakota passed legislation (SB 2057) requiring the legislature to undertake an evaluation of 21 of the state’s tax incentive programs at least once every six years. According to Pew’s Business Incentives Initiative, North Dakota is one of 21 states (four in the Midwest; see map at right) that have passed laws since 2012 requiring regular evaluations of tax incentive programs offered by the state.
CSG Midwest
Two state legislatures in the Midwest took actions this past year to encourage private investments in affordable housing. In late 2016, Illinois Gov. Bruce Rauner signed a law (SB 2921) extending a tax-incentive program that has been in place since 2011. It provides a 50-cent tax credit for every dollar donated to a not-for-profit group that is working to create or preserve housing for low-income residents. Since its inception, Illinois officials say, the tax credit has leveraged more than $370 million in private investment and helped create or preserve over 18,000 affordable housing units.
Nebraska’s LB 884 was signed into law in April 2016.

There are not many questions of public policy that economists widely agree upon. The benefits of free trade, negative impacts of rent controls, and the infeasibility of returning to a gold standard, are a few.  Add to that list the use of tax-exempt municipal bonds to subsidize the construction of professional sports complexes, a practice that 85% of surveyed economists disagree with.

Econ Piggy

In 2016, shoppers in 17 states will have the opportunity to purchase certain items free of sales tax on what are known as sales tax holidays. Widely popular with consumers, sales tax holidays are often pitched as a win-win for everyone; spurring further local economic growth while giving taxpayers’ pocketbooks some much needed relief. Recent findings, however, suggest that these holidays are often ineffective fiscal tools.

In March 2015, U.S. Supreme Court Justice Anthony Kennedy wrote a concurring opinion for Direct Marketing Association v. Brohl stating that the “legal system should find an appropriate case for this Court to re-examine Quill.” Two lawsuits out of South Dakota and Alabama might be exactly the case Kennedy had in mind. 

In the last month, legislation to eliminate the so-called “tampon tax” has been passed in New York, Connecticut and Illinois. The push to exempt tampons, pads, and other feminine hygiene products from state sales taxes has come amid criticism that the tax unfairly affects women. Supporters argue that menstrual products should be treated like other medical necessities, which are currently tax exempt in most states.

San Francisco startup Airbnb is a vital part of what’s known as the sharing economy as it connects property owners with travelers seeking unique travel accommodations. As some states find themselves in budgetary binds, looking to Airbnb and similar businesses for additional revenue may prove a popular option. As of July 1, 2016, ten states require Airbnb to collect and remit applicable state lodging and sales taxes.

Researchers at the Harvard School of Public Health say yes, using a sophisticated microsimulation model to predict impacts of the tax. In a report released last month, the Harvard researchers calculated the proposed soda tax in Philadelphia would prevent 2,280 cases of diabetes each year once the tax is fully implemented. The Harvard microsimulation model assumes lower consumption if the city implements the three cents tax per ounce of sugar-sweetened beverage, a 49 percent price increase.

States may reap some revenue rewards following the rollout of new rules by the U.S. Treasury Department related to corporate income taxes. On April 4, 2016, the U.S. Treasury Department announced the issuance of new regulations that are intended to make it more difficult for companies to pursue corporate inversions—the practice used by companies to reincorporate overseas in order to reduce their tax burden on income earned abroad—and to reduce subsequent profits for tax purposes through a tactic called earnings stripping. Earnings stripping is a technique employed by companies after a corporate inversion to minimize U.S. tax obligations by transferring debt to a foreign parent company and declaring the interest on the debt as a deduction.

In 2016, 45 states plus the District of Columbia have sales taxes in place and five states do not. Tax rates in 2016 remained relatively unchanged from 2015, but have been creeping slowly upward over the past decade.

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