Tax hikes, relief, dedication, and resurrection(Read article summary)
Latest updates on tax policy, including Obama's statements on the Earned Income Tax Credit during his final State of the Union address.
Obama plugs the EITC for childless adults in his State of the Union. In a speech characterized by broad themes and relatively few specific proposals, President Obama did put in another plug for expanding the Earned Income Tax Credit to childless adults. The idea has broad bipartisan support but never seems to win congressional approval. Maybe it will somehow sneak in in 2016.
On the campaign trail: More tax ideas from Hillary, and Rubio questions a Cruz idea. Democratic hopeful Hillary Clinton wants to raise the estate tax and apply it more broadly, echoing President Obama’s call to return to 2009 parameters. Republican Marco Rubio questioned the conservative chops of Ted Cruz, whose “business flat tax” is essentially a value-added tax. Rubio says conservatives have been against a VAT for years.
Maryland’s Governor Larry Hogan wants tax relief. The Republican announced yesterday his proposal for tax relief for retirees, families making below $53,000 a year, and the smallest of small businesses. The $400 million, five-year plan would affect one million Maryland residents and 300,000 small firms. Republican legislators would like to return any surplus to taxpayers. But Democrats, who control the legislature, want to spend more on education.
In New Jersey: A new nonprofit hospital “tax.” The legislature has passed a bill that would require the state’s nonprofit hospitals to pay the municipalities in which they reside fees in lieu of taxes to cover the costs of public safety and other services. The fee: $2.50 per bed per day, plus $250 per day for each satellite emergency care facility. Lawmakers and hospital executives agreed to the fee in response to last year’s tax court ruling: Morristown Medical Center, a nonprofit hospital, was found to be operating as a for-profit and had to pay property taxes.
Also in New Jersey: Voters will be asked to dedicate gas tax revenue to transportation. The state’s constitution already dedicates most gas tax revenue to transportation projects, with the exception of about $40 million annually in diesel tax and petroleum products gross receipts tax revenues. A new ballot measure will ask voters to dedicate those dollars—as well as revenue from a future gas tax increase—to transportation. Will using the money for popular transportation projects boost support for a gas tax increase? Time will tell.
In Virginia, a new fight against the car tax. Republican presidential candidate and former Virginia Governor Jim Gilmore and state Democratic Senator J. Chapman Petersen both want to nix the state’s car tax. Gilmore ran on a “no car tax” platform in 1997 but failed to kill the levy. Petersen just proposed eliminating the tax through a constitutional amendment, but would give localities the option to levy a gas tax to cover lost revenue.
Colorado resurrects its the Earned Income Tax Credit. The state’s EITC has been absent for 15 years, but it’s back this year.The credit will equal about 10 percent of federal earned income tax credits in the state, or at least $77 million. Colorado is one of 27 states with its own EITC but residents can only access it when the state issues refunds under its Taxpayer's Bill of Rights, and that’s the case for fiscal year 2015.
About Mark Zuckerberg’s charitable pledge… TPC’s Gene Steuerle examines the Facebook CEO’s donation of company shares for charitable purposes. Zuckerberg and his wife won’t get much in the way of tax deductions for a lifetime of giving. But donating through a limited liability corporation gives their philanthropic effort far more flexibility. “These types of private initiatives, sometimes labeled as a Fourth Sector, push society in new, exciting, and yet-to-be-determined directions,” concludes Steuerle.
This article first appeared at TaxVox.