March 23, 2022
Major State Tax Proposals and Developments
A MAINE bill that would limit big box retailers’ ability to mount “dark store theory” legal challenges has now been approved in the Senate in addition to the House. The bill would require that towns and cities base property assessments on the highest and best use.
MICHIGAN Gov. Gretchen Whitmer has vetoed a $2.5 billion tax cut bill that would have lowered the state flat income tax rate from 4.25 to 3.9 percent, reasoning that a substantial tax cut would result in either future tax hikes or painful cuts that would hurt families down the line. Gov. Whitmer also intends to veto a suspension of Michigan’s 27 cent gas tax, but that she is open to temporarily reducing or suspending the 6 percent state sales tax on gasoline.
Lawmakers in both chambers of the OKLAHOMA legislature passed a mixed bag of untargeted tax cuts. The Senate passed a bill that would put the corporate franchise tax on hold starting in tax year 2023 and years going forward. It is estimated to decrease revenue by $57.2 million in fiscal year 2024. Meanwhile, the House passed a handful of bills that would cut taxes by around $500 million. One bill would suspend the state sales tax on groceries for two years. Another would reduce all tax brackets by 0.25 percent. They also passed a House Joint Resolution that proposed a constitutional amendment that would freeze valuations for property taxes on households with homeowners who are 65 and older.
State Tax Roundup
CONNECTICUT’s tax debates are heating up. Gov. Ned Lamont is still prioritizing property tax and car tax breaks, while others continue to push for creating or bolstering targeted refundable credits. A gas tax holiday has swept the legislature and is likely to pass.
In HAWAII there is a proposed bill to exempt diapers, food, and medicine from their general excise tax.
After cutting nearly $2 billion in taxes this legislative session, IOWA Senate Republicans are proposing a constitutional amendment that would require a supermajority to raise future taxes while preserving a simple majority for future cuts.
The MISSISSIPPI House released a new income tax cut proposal that would gradually eliminate the personal income tax by $100 million a year over eighteen years. Senate leaders and Lt. Gov. Delbert Hosemann oppose the House plan which would use a temporary surplus for permanent cuts.
House members in MISSOURI considered multiple consumption tax changes, including a six-month state gas tax holiday and legislation that would permanently exempt diapers and feminine hygiene products from state sales tax.
In NEBRASKA, the income tax cut backed by Gov. Pete Ricketts has stalled for now, but proponents of the tax cut for high-income households have already amended it into another bill that the full legislature will consider soon.
As an alternative to gas tax suspensions discussed in other states, NEW HAMPSHIRE lawmakers are considering a $40 million proposal to cut vehicle registration fees for any vehicle or trailer registered between July 2021 and June 2022.
NEW MEXICO Gov. Michelle Lujan Grisham and legislative leaders announced a special session, beginning April 5. They will consider a “junior” spending bill that will include relief for residents facing an increase in the cost of goods. Specifics of the plan have not yet been released.
A coalition of NEW YORK advocates recently gathered to continue pushing for improvements to the state’s Empire State Child Tax Credit, such as including children under 4 years old and increasing the value of the credit.
OREGON lawmakers passed a one-time $600 payment to EITC recipients, an alternative to the gas tax holidays and untargeted rebates being considered in many other states.
A proposed bill in PENNSYLVANIA could make it more difficult to enact tax increases by allowing voters to override changes on the ballot; if voters reject a tax, the General Assembly could override the referendum with a two-thirds vote.
WEST VIRGINIA Gov. Jim Justice signed a budget bill, vetoing a provision that would have set aside $265 million for future income tax cuts. But the state legislative session may not be over since some state Democrats asked for a special session to suspend the state gas tax
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