Holiday season

It’s holiday season (sales tax), but who’s really celebrating? –ITEP

.ITEP Staff

It’s holiday season – well, sales tax holiday season, that is. But after taking a closer look, you might notice there’s not much to celebrate, as this year twenty states will forgo a combined $1 billion in sales tax holidays, which would have been able to help fund vital services. As noted in the updated ITEP report by Marco Guzman, these flashy but ultimately ineffective sales tax exemptions do little to provide meaningful relief, especially to those who need it most. Also worth checking out is Kamolika Das’ summary of the 2022 legislative session and Neva Butkus’ thoughts on the trends gaining momentum in state houses across the country.

Major State Tax Proposals and Developments

  • MONTANA Democrats unveiled their plan to invest $1 billion of the state budget surplus in housing, property tax relief, child care and mental health services. – MARCO GUZMAN

State Overview

  • A group called Consumer Watchdog is trying to draw attention to soaring gas prices in CALIFORNIAsupporting a bill that requires more detailed reporting of crude oil costs and profit margins from oil companies, and also calling for more oversight and a tax on excess profits.
  • CALIFORNIA will begin collecting a lithium mining tax in 2023, with revenue going to local counties and Salton Sea improvement projects (where lithium is mined).
  • After a record surplus in fiscal year 2022, IDAHO Brad Little has announced that if re-elected, he plans further tax cuts and investments in education and infrastructure.
  • The INDIANA The Legislature has entered a special session to discuss a gasoline sales tax cap, a sales tax suspension on residential utility bills and a $225 tax refund.
  • MICHIGAN Gretchen Whitmer signed the state budget, but a tax cut package is still in the works as Democratic and Republican leaders have yet to reach a consensus.
  • MISSISSIPPI Governor Delbert Hosemann is pushing for a direct refund in the 2023 legislative session, even though the legislature recently passed an income tax cut that will cost the state more than $525 million a year when it will be fully implemented.
  • NEVADA hopes to recover some of the lost revenue through a lawsuit alleging major online travel booking sites owe the state hundreds of millions of dollars in taxes on unpaid hotel rooms.
  • NEW YORK is now the latest state to exempt diapers from its sales tax, a trend also covered below in “What We Read.”
  • PENNSYLVANIA lawmakers had temporarily increased the state property tax/rent rebate program by $140 million in the state budget for existing recipients, but state budget negotiators repealed the arrangement.
  • SOUTH DAKOTA Kristi Noem wrote a blog post expressing that she is “cautiously optimistic” about the state’s financial situation. Importantly, the governor cautioned against cuts to the state’s tax structure and mentioned the need to be prepared for any potential economic difficulties the state may face in the future.
  • TEXAS Governor Greg Abbott has pledged his support for a major property tax cut in next year’s legislative session.
  • WASHINGTON The state has released guidelines on how state sales tax applies to non-fungible tokens (NFTs), which could be a useful model for other states to follow.
  • On Tuesday during a special session, the WEST VIRGINIA The House of Delegates Finance Committee has passed a bill requested by Governor Jim Justice that would reduce income taxes by about 10%. The bill is likely to pass the House, but the Senate still seems to favor property tax cuts.

What we read

  • A test in the New York Times by Robin Kaiser-Schatzlein describes Alabama’s lack of tax revenue and its excessive reliance on excessive fines and fees.
  • Paul Constant of Business Intern discusses how raising taxes on the rich is gaining traction among voters on both sides of the aisle, potentially due to growing income inequality and sky-high displays of wealth seen by billionaire celebrities such as Jeff Bezos and Elon Musk.
  • CNN Business reports on the recent trend of exempting diapers from state and local sales taxes, noting that the number of states taxing diapers fell to 31 as of June, with exemptions also approved to go into effect this year or next in Colorado, Florida, Iowa, Maryland, New yorkand Louisianaand a number of other states are also considering exemptions.
  • An enterprising journalist WHEC in Rochester, New York, is carefully monitoring gasoline price data and confirming our concerns about gasoline tax exemptions – in particular that there is no way to ensure savings reach the consumers instead of being siphoned off by the gas companies.

If you like what you see in the recap (or even if you don’t), please send comments or tips for future posts to Aidan Davis at [email protected]. Click here to sign up to receive the summary by email.

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