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.

As of Feb. 2, 2016, scholarship tax credits were available in 18 states. Scholarship tax credit programs are used to provide a form of school choice, allowing individuals or corporations to receive a tax credit on state taxes for donations made to grant private school scholarships. Scholarship tax credit programs are also known as tuition tax credits and education tax credits. Some states provide parents the opportunity to deduct all or a portion of their child’s private school tuition from their state taxes. Others provide corporations the ability to donate to an approved non-profit scholarship funding organization and apply for a tax credit for the donation.

The Tenth Circuit held that a Colorado law requiring remote sellers to inform Colorado purchasers annually of their purchases and send the same information to the Colorado Department of Revenue is constitutional.

In Quill Corp. v. North Dakota, decided in 1992, the Supreme Court held that states cannot require retailers with no in-state physical presence to collect use tax. To improve tax collection, in 2010 the Colorado legislature began requiring remote sellers to inform Colorado purchasers annually of their purchases and send the same information to the Colorado Department of Revenue. The Direct Marketing Association sued Colorado in federal court claiming the law was unconstitutional under Quill

On Dec. 19, 2014, President Obama signed into law the Stephen Beck Jr. Achieving a Better Life Experience, or ABLE, Act, that allows persons with disabilities to save for their futures through tax-advantaged savings accounts. The act gives qualified Americans with disabilities the chance to save money and meet the added expenses of living with a disability without jeopardizing their eligibility for important supports such as Supplemental Security Income, or SSI, and Medicaid.

NOW, THEREFORE BE IT RESOLVED, The Council of State Governments supports efforts by Congress to regulate e-commerce through legislation that allows States to enforce their existing sales and use tax laws, regardless of the method of transaction, and to collect taxes under state law.

This Act provides that neither the state nor a political subdivision may impose, assess, collect, or attempt to collect a tax on Internet access or the use of Internet access.

CSG Midwest
In his home legislative district, Ohio Sen. Cliff Hite knows well the dilemma facing local agricultural producers: Their tax bills are skyrocketing (by an average of 62 percent this year), he says, while returns are declining and operational costs are rising.
But finding a legislative fix to the problem is much easier said than done.
“Discussion on use value could backfire on farmers,” says Hite, noting that Ohio, like most states, has “an increasingly urban electorate and legislature not understanding why farmers should get a tax reduction.”
In Ohio, and most other Midwestern states, farmland is appraised using a formula based on “current agricultural use value.” Based on factors such as commodity prices, soil productivity, rental rates, production expenses and interest rates, the state determines the income that a farmer can be expected to earn on his or her land.

As consumers continue to use the Internet to acquire goods, members of Congress are attempting to solve a quirk in tax law that is preventing states from collecting potential sales tax revenue. Bills in both the House and Senate aim to give states the authority to require out-of-state businesses selling online or through catalogs to collect taxes already owed under state law the same way local businesses do. Similar legislation failed to reach President Obama’s desk last Congress, but proponents are moving swiftly to ensure the bills remain at the top of the Congressional agenda.

Forty-five states levy a general statewide sales tax, with rates ranging from 2.9 to 7.5 cents $1 as of Jan. 1, 2015. Over the past decade, sales tax rates have remained relatively stable, with few states making significant changes. Among the states that levy a sales tax, the average rate was 5.64 percent in 2015, up from 5.35 percent in 2005.

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