Taxes, Debt, Spending

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Are Sales Tax Holidays Good Policy?

 

It’s back-to-school season, so that means parents are rushing to stores while clutching school supply lists.  In some states, they may get a brief reprieve from paying sales tax on clothes or notebooks. This type of sales tax holiday may sound like a great deal for consumers, but some experts say it is bad policy.


Sales tax holidays are promoted as a way to spur retail sales as well as help families afford necessary school supplies. Politicians in 16 states have enacted these sales tax holidays, and they cover a variety of goods.

 

Bob Peterson, a state senator from Ohio, co-sponsored legislation in that state creating a sales tax holiday this year. He says, “Ohioans saved millions of dollars on back-to-school items during the prior Sales Tax Holidays, and stores saw significant boosts in statewide retail sales.”

 

According to the nonpartisan Tax Foundation, however, these supposed benefits are an illusion. Here are some of the problems with this brief window of tax-free shopping, according to the foundation’s experts:

 

“Most sales tax holidays involve politicians picking products and industries to favor with exemptions, arbitrarily discriminating among products and across time, and distorting consumer decisions… Political gimmicks like sales tax holidays distract policymakers and taxpayers from genuine, permanent tax relief. If a state must offer a ‘holiday’ from its tax system, it is an implicit recognition that the state’s tax system is uncompetitive. If policymakers want to save money for consumers, then they should cut the sales tax rate year-round.”

 

What do you think? Do you support sales tax holidays? Or do you think that these holidays are gimmicks that have no real positive effect?

 

Pennsylvania House Bill 542

 

Check out this key bill voted on by elected officials in Pennsylvania, check-in to the VoteSpotter app to see how your legislators voted, and comment below to share what you think!

 

House Bill 542, Mandate Online Sales Tax Notice: Passed 26 to 24 in the state House on July 27, 2017.

 

To mandate that online out-of-state companies selling to Pennsylvania customers must remind these customers that they owe the commonwealth’s sales tax on goods being purchased. In addition, these companies must send any Pennsylvania resident who spent more than $500 in a year a notice that they owe Pennsylvania sales tax.

 

Comment below to share what you think of Pennsylvania House Bill 542!

 

 

Missouri House Bill 7

 

Check out this key bill voted on by elected officials in Missouri, check-in to the VoteSpotter app to see how your legislators voted, and comment below to share what you think!

 

House Bill 7, Appropriations for the Economic Development, Insurance, and Labor Departments: Passed 115 to 38 in the state House on April 6, 2017. 

 

To spend $301,156,373 for the Department of Economic Development, $43,833,994 for the
Department of Insurance, Financial Institutions and Professional Registration, and $212,298,975 for the Department of Labor and Industrial Relations.

 

Comment below to share what you think of Missouri House Bill 7!

 

 

Colorado House Bill 1222

 

Check out this key bill voted on by elected officials in Colorado, check-in to the VoteSpotter app to see how your legislators voted, and comment below to share what you think!

 

House Bill 1222, Create Family Caregiver Support Fund Tax Check-off: Passed 27 to 7 in the state Senate on April 18, 2017. 

 

To create a family caregiver support fund in the state treasury and, if space on tax forms permits, allow taxpayers to designate tax funds to provide money for the fund. Money remaining in the fund at the end of a fiscal year would go to Easter Seals Colorado.

 

Comment below to share what you think of Colorado House Bill 1222!

 

 

Tennessee House Bill 261

 

Check out this key bill voted on by elected officials in Tennessee, check-in to the VoteSpotter app to see how your legislators voted, and comment below to share what you think!

 

House Bill 261, Delay Collecting Internet Sales Tax: Passed 31 to 0 in the state Senate on 9 May, 2017.

 

To delay collecting the sales tax on Internet sales until the conclusion of a court case over the legality of such a tax.

 

Comment below to share what you think of Tennessee House Bill 261!

 

 

What Congress Has Left Undone

 

Members of Congress are leaving for a one-week recess to celebrate Independence Day. When they return to Washington, they will have three weeks in July before their August recess. If they aim to tackle all the big items on their agenda, this will be a very busy time.

 

One of the issues that Congress must deal with is raising the debt ceiling. This has been an ongoing fight in recent years, with conservatives asking for a number of concessions for them to go along with increasing the government’s ability to borrow. Conservatives are pressing for more spending cuts in order for them to go along with increasing the debt ceiling, which plays into both unresolved budget issues as well as the start of the annual passage of appropriation, or spending, bills. There are calls from Democrats and the president to exceed spending caps that currently exist, but the House Freedom Caucus members may demand more fiscal discipline.

 

The Senate has yet to pass a budget resolution that will serve as a guide for the appropriations bills that must be passed to keep the government running. In the House, efforts to craft a budget resolution have stalled in the Budget Committee. Conservatives want large cuts in entitlement programs, such as food stamps. More moderate members oppose these efforts. It is unclear whether Chairman Diane Black will be able to find a way to satisfy both wings of the party, or whether this will be another year without a budget resolution.

 

Efforts to deal with the government’s spending will be paramount during July, but some members of Congress also want to work on the issues of tax reform and infrastructure spending. There is no consensus in either body (or in either party) on how to approach those, but the president and Congress have made these issues a priority. That gives both branches of government an incentive to start work on them soon if they want to have legislative victories prior to the end of President Trump’s first year in office. However, failure to pass a budget resolution makes tax reform much more difficult.

 

What do you think the focus of Congress should be in July? Do you want to see the debt ceiling raised? What should federal spending look like? How important is it that work on tax reform and infrastructure spending be started?

 

Arizona House Bill 2366

 

Check out this key bill voted on by elected officials in Arizona, check-in to the VoteSpotter app to see how your legislators voted, and comment below to share what you think!

 

House Bill 2366, Maintain property tax breaks for farmers: Passed 30 to 0 in the state house on February 22, 2017 and 59 to 0 in the state Senate on April 20, 2017

 

To allow property tax reductions to remain in place on inactive agricultural land if it is inactive because of limits on water allocations.

 

Comment below to share what you think of Arizona House Bill 2366!

 

Arizona House Bill 2166

 

Check out this key bill voted on by elected officials in Arizona, check-in to the VoteSpotter app to see how your legislators voted, and comment below to share what you think!

 

House Bill 2166, Affirm that retired state employees returning to work must pay into retirement system: Passed 39 to 20 in the state House on February 13, 2017 and 28 to 2 in the state Senate on April 20, 2017

 

To clarify that an employer is required to pay into the Arizona State Retirement System on behalf of a retired member who returns to work in state employment.

 

Comment below to share what you think of Arizona House Bill 2166!

 

Colorado Senate Bill 183

 

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Senate Bill 183, Spend $100,000 on grants related to the commissioning of the U.S.S. Colorado nuclear attack submarine: Passed 29 to 6 in the in the state Senate on May 8, 2017 and 65 to 0 in the state House on May 9, 2017

 

To conform state election laws with the results of voter-approved ballot initiatives in 2016. The bill would restore the party-based primary voting system for the U.S. Presidential election. The bill requires the general assembly to pay for any presidential primary elections. The bill also provides for unaffiliated voters to receive ballots for primary elections.

 

Comment below to share what you think of Colorado Senate Bill 305!

 

West Virginia Senate Bill 237

 

Check out this key bill voted on by elected officials in West Virginia, check-in to the VoteSpotter app to see how your legislators voted, and comment below to share what you think!

 

Senate Bill 237, Repeal obsolete tax regulations: Passed 33 to 0 in the state Senate on February 15, 2017

 

To repeal certain tax related rules and regulations which are no longer authorized or are obsolete

 

Comment below to share what you think of West Virginia Senate Bill 237!

 

What’s in the Trump Budget?

 

President Trump released his budget proposal this week. As may be expected from someone who promised to shake up Washington, his spending plan outlines some big changes to federal spending.

 

One of the major differences between Trump and previous presidents involves entitlement programs. These are programs such as Medicaid and welfare that do not require an annual appropriation from Congress. Instead, if you qualify for them, you are entitled to receive them, and the federal government must find money to pay. Over the next ten years, the president’s budget lays out major alterations to these programs that could result in some big savings:

 

Medicaid – $880 billion. These reductions come from ending the expanded Medicaid matching rate for childless adults that was put in place by the Affordable Care Act. The budget also assumes that states will be given a capped amount of money per enrollee starting in 2020 (right now, states receive a matching rate for every person on Medicaid with no cap).

 

Food stamps – $191 billion. This assumes savings from allowing states to impose work requirements on Supplemental Nutrition Assistance Plan (SNAP) recipients.

 

TANF - $21.6 billion. The budget calls for reducing the Temporary Assistance for Needy Families (TANF) block grant to states as well as eliminating the contingency fund that states can access if there is more demand for the program.

 

For some programs, such as Medicaid, the spending projected by the Trump budget is a reduction in the future growth of the program. That is, there is a certain baseline spending growth that is assumed right now. Trump’s budget offers policy recommendations that would alter this baseline, reducing future growth. For other programs, such as SNAP, the Trump budget projects actual spending to be lower in 10 years (you can find more detailed charts on this here).

 

While entitlement programs would face reductions and many federal agencies would see their budgets reduced, there are a few increases built into the budget. The Department of Defense, the Department of Homeland Security, and the Department of Veterans’ Affairs would receive increases.

 

It should be remembered, however, that this budget proposal will not necessarily have any real effect. As we wrote in a previous blog post:

 

"Even after the president submits his budget, this does not mean that his spending plan will go into effect. Under the federal budget procedure, the president submits a budget, but Congress must pass its own budget resolution. The congressional budget resolution may or may not incorporate what the president wants to see happen. Each chamber passes its own resolution, and these two versions must be reconciled by the two chambers."

 

The president’s budget is more like a vision of where he thinks federal spending should proceed over the next decade. It does not mean that spending will actually follow along those lines. Congress has the power to determine funding levels for both discretionary programs (like defense) and make policy changes for entitlement programs (like Medicaid). Only action by the legislative branch can alter the direction of federal spending.

 

What do you think of the president’s budget proposal? Do you like that he has called for a reduction in these programs? Or do you see his priorities as being too draconian for the poor?

 

Michigan Senate Bill 98: Authorize Flint “promise zone” tax increment financing authority

 

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Senate Bill 98, Authorize Flint “promise zone” tax increment financing authority: Passed 35 to 2 in the state Senate on May 16, 2017

 

To authorize a “low educational attainment promise zone” tax increment financing authority in Flint. These entities “capture" a portion of  increases in school property tax revenue and use the money to partially subsidize college tuition for local students.

 

Comment below to share what you think of Michigan Senate Bill 98!

 

Build the Wall or Shut the Government Down?

 

A wall that has not even been built could have been the obstacle that may have prevented many federal employees from going to work today.

 

The Trump Administration’s insistence that funding for a wall on the Mexican border be included in spending legislation was seen as a potential sticking point that prevents that legislation from passing Congress. If that had happened, it will mean portions of the federal government will not have funding to operate. A partial government shutdown would have been the result.

 

We have been in this position before. Clashes between the executive branch and legislative branch over federal spending bills have caused government shutdowns twice in the past. Those instances occurred when the two branches were controlled by different parties. Now, however, Republicans hold both the White House and Congress.

 

While Republicans control Congress, Democrats are playing a key role in this situation. Any spending legislation needs 60 votes to advance in the Senate. With only 52 Republicans, Senate Majority Leader McConnell needs to attract some Democratic votes for any bill that would avert a government shutdown.

 

Gaining those votes is proving difficult, as Democrats resist President Trump’s desire to have funding for a border wall (or at least funding to start on a wall) included. Some Democrats point to the president’s promise that Mexico would pay for a wall, wondering why the American taxpayers should pick up the tab for this. Others oppose the wall on principle.

 

The federal government is at this point because Congress and President Obama did not agree on long-term spending bills prior to the start of this fiscal year on October 1. Instead, they passed short-term funding measures. These measures end on April 28. Congress must either pass legislation that funds the federal government through the end of the fiscal year, or it must pass a continuing resolution that would provide short-term funding. If these things do not happen, then “non-essential” government personnel will not be reporting to work next Monday.

 

What do you think that Congress and the president should do? Should disputes over a border wall hold up funding for the rest of the federal government?

 

Trump Wants us to “Buy American, Hire American”

 

President Trump has signed an executive order that is aimed at increasing the hiring of U.S. workers and ensuring that government agencies buy U.S. goods. Called “Buy American, Hire American,” some people are asking what this means for the average person.

 

The executive order directs federal agencies to step up efforts to police abuse of a visa program that allows high-skilled foreigners to work in the U.S. The order also tasks agencies to find ways to modify this visa, called an H-1B, so it would be re-oriented to go to the most highly-skilled and most highly-paid foreign workers. That’s the “Hire American” part of the plan.

 

The “Buy American” aspect of Trump’s order would make some changes to federal purchasing rules so it would be more difficult for agencies to buy foreign products. There is a requirement already on the books that the federal government buy American products when possible, but waivers can be granted to get around it.

 

Supporters of the president’s actions say they will prioritize American workers and American businesses. Foreign workers using H-1B visas, the argument goes, take jobs from American workers. Changing the system to prioritize higher-paid foreign workers will ensure that there are more jobs for Americans to do. And strengthening the “Buy American” law already in place will stimulate U.S. companies that supply goods to the government.

 

Opponents of this order point out that many companies need foreign workers to compete in the global marketplace. They say this is especially true of companies that use H-1B visas, since they tend to be in the high-tech industry. Without foreign workers, the argument goes, these companies would not be able to fill the jobs they need filled. As for “Buy American,” critics contend that government should be looking for the lowest price possible for products, regardless of where they come from. Anything less is wasting taxpayer money.

 

What do you think? Do you support President Trump’s actions to help U.S. workers and businesses? Or will this executive order hurt high-tech companies and taxpayers?

 

Tax Reform May be Next on DC’s Agenda

 

Taxes are forefront in the minds of millions of Americans today. As you rush to file your taxes, you may be thinking that there should be an easier way. The idea of tax reform is a popular one, but the consensus breaks down over details. Reduce rates, hike taxes on the rich, simplify the code – there are numerous ideas about how the tax code could be modified.

 

These issues may soon be taken up by members of Congress. President Trump has said that he would like to see a tax reform bill on his desk by August. That is unlikely to happen, given the complexity of the issue and the fact that real work has yet to start. However, changes to the tax code are probably the next big thing that lawmakers in Washington will be discussing.

 

Here are some of the ideas being considered:

 

Lower tax rates: In his presidential campaign, Donald Trump was clear that he wanted tax rates cut. He sees these cuts as a way to stimulate economic growth. President Trump also campaigned on consolidating tax brackets from seven into three. The questions for Congress to work out include how low should rates be cut, should revenue losses from rate cuts be offset with higher taxes elsewhere, and what group of taxpayers should benefit from cuts?

 

Increasing the standard deduction: If you don’t itemize your income tax deductions, you get to deduct a portion of your income right at the start. President Trump’s campaign plan called for more than doubling this standard deduction.

 

Border adjustment tax: Some House Republicans have floated the idea of changing the way taxes are collected from businesses. Right now, the U.S. government collects taxes on what companies produce in the U.S. Under this proposal, the U.S. government would collect taxes from what companies sell in the U.S. That means no taxes on goods that are exported but new taxes on goods that are imported for purchase by American consumers.

 

Cutting payroll tax: The taxes that fund Social Security and Medicare are called payroll taxes. Unlike the income tax, these taxes aren’t progressive – that is, they don’t increase as income goes up. Some in Congress have proposed cutting these taxes as a way to lighten the tax load on lower-income workers. However, if this happens they would need to find other tax streams to pay for Social Security and Medicare.

 

Eliminating deductions: Removing provisions of the tax code that give breaks for certain behavior is one of the main ways to simplify the code. Eliminating these tax breaks also means more revenue, which could help offset any tax rate cuts. That is what happened during the tax code rewrite in 1986, a bipartisan effort that many hail as a good blueprint for future action. One thing being discussed is the elimination of the deduction for state and local taxes.

 

Cutting the corporate tax rate: Compared to other countries, the U.S. has a high corporate income tax rate. There has been bipartisan support for lowering this rate. For instance, President Obama proposed lowering it from 35% to 28%.

 

Given that it is early in the process, there are certain to be many other ideas for altering the tax code. It may even prove to be too contentious to achieve majority support around a single reform package, which will leave us with the current tax code in place. However, after the failure of legislation that would have repealed Obamacare, President Trump and congressional Republicans have significant motivation to score a victory on this issue.

 

What do you think that tax reform should include?

 

Tennessee Senate Joint Resolution 9: Call for planning balanced budget constitutional convention

 

Check out this key bill recently passed by elected officials in Tennessee, check-in to the VoteSpotter app to see how your legislators voted, and comment below to share what you think!

 

Senate Joint Resolution 9, Call for planning balanced budget constitutional convention: Passed 27 to 3 in the state Senate on February 6, 2017

 

To call for a convention of the states to make plans for a convention that would amend the federal Constitution to require a balanced federal budget.

 

Comment below to share what you think of Tennessee Senate Joint Resolution 9!

 

Tax Increases Coming to West Virginia?

 

 

If Governor Jim Justice gets his way, West Virginians may be paying higher taxes and fees. In his budget proposal, the governor has asked legislators to approvea variety of tax increases as a way to eliminate the gap between revenue and desired spending.

 

In early February, the governor proposed tax and fee increases that included:

  • Increasing the sales tax from 6% to 6.5%
  • Imposing the sales tax on a variety of services that are currently untaxed
  • Levying a .2% gross receipts tax, which a business would pay regardless of its profitability
  • Increasing the beer tax
  • Raising the DMV license fee by $20

 

Gov. Justice also proposed raising the gasoline tax by 10 cents a gallon to pay for new infrastructure projects. That would bring the state gasoline tax to 43.2 cents a gallon.

 

Later in the month, he revised his proposal in a few significant ways:

  • Increasing the gasoline tax by 4.5 cents a gallon as opposed to 10 cents
  • Charging out-of-state motorists increased tolls when they use West Virginia toll roads
  • Imposing a 1-cent-per-ounce tax on sugar-sweetened drinks

 

Do you think these tax increases are the best way to deal with the state’s budget situation? Are you willing to pay higher gasoline prices to pay for state infrastructure projects?

 

Michigan House Bill 4001: Cut state income tax rate .2 percent

 

Check out this key bill recently passed by elected officials in Michigan, check-in to the VoteSpotter app to see how your legislators voted, and comment below to share what you think!

 

House Bill 4001, Cut state income tax rate .2 percent: Failed 52 to 55 in the state House on February 23, 2017

 

To cut the state income tax from the current 4.25 percent to 4.05 percent over two years. Twelve Republicans voted 'no' and one Democrat voted 'yes.'

 

Comment below to share what you think of Michigan House Bill 4001!

 

What’s Up with President Trump’s Budget?

 

 

Defense spending up. Big cuts to social programs. Federal funding for the arts on the chopping block.

 

You may have seen headlines or social media posts that give details about President Trump’s budget. Depending on where you stand, you may be cheering, weeping, or shrugging your shoulders. But what is actually going on with the president’s spending plan?

 

Officially, nothing is going on – yet. A 1990 law requires that the president submit a budget proposal to Congress by early February. Donald Trump has not done so (he wouldn’t be the first president to miss the deadline). In fact, his spokesman says that the president’s budget will be unveiled “later this year.”

 

Right now, the White House has asked agencies to find a way to increase defense spending by $54 billion and cut other spending by an equal amount.  That gives a broad idea of what the president will propose, but it does not give any details about what agencies may be targeted for cuts or what shape those cuts may take.

 

Even after the president submits his budget, this does not mean that his spending plan will go into effect. Under the federal budget procedure, the president submits a budget, but Congress must pass its own budget resolution. The congressional budget resolution may or may not incorporate what the president wants to see happen. Each chamber passes its own resolution, and these two versions must be reconciled by the two chambers.

 

The congressional budget is not even the final spending plan. It is, instead, a detailed outline of what spending should look like. If the resolution recommends changes to mandatory spending programs such as Medicaid and Social Security, Congress must pass those changes. For non-mandated spending, such as on defense or national parks, the congressional budget resolution provides a guide for appropriation committees to allocate actual spending amounts. The budget resolution does set forth special rules for consideration of some items, so it is a useful blueprint for Congress to take on future spending decisions.

 

It should be pointed out that this process is often ignored by Congress. Some years it does not pass any budget resolution. Instead, it simply passes appropriations bills to authorize a certain level of federal spending. We don’t know if that could happen this year. Given that the president is not close to submitting his budget resolution (remember, it was due in early February), chances are good that we’ll see some interesting maneuvers during this year’s budget process.

 

Comment below and share how you think President Trump and Congress should structure the 2017 federal budget!

 

North Carolina House Bill 7: Earmark share of revenue increases to the state's rainy-day fund

 

 

Check out this key bill recently passed by elected officials in North Carolina, check-in to the VoteSpotter app to see how your legislators voted, and comment below to share what you think!

 

North Carolina House Bill 7, Earmark share of revenue increases to the state's rainy-day fund: Passed 110 to 3 in the state House on February 15, 2017

 

To set aside 15 percent of new revenue growth per year in the state saving reserve. That fund currently gets one-fourth of what's left over in state coffers at the end of the fiscal year. The bill would limit the fund's use to avoiding spending cuts if revenue declines, if a court ruling imposes damages against the state, or if there is a state emergency. Also, if a proposed withdrawal is more than 7.5 percent of the last state budget, the bill would require a two-thirds vote of both houses to approve it.

 

Comment below to share what you think of North Carolina House Bill 7!

 

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