Tax Law

State Net Capitol Journal – June 1, 2015; Gas Tax Hike Coming to California?

Budget & Taxes

Gas Tax Hike Coming to CA?

Raising prices at the gas pump is a risky proposition in California, where cars have always been king. In fact the state is one of only a few in the nation that haven’t raised gas taxes since the early ‘90s. But that could change this year, with a $59 billion backlog of roadway maintenance getting even anti-tax Republicans on board with the idea.

“We’re talking about taking some difficult votes,” said Sen. Anthony Cannella (R), vice chairman of the Senate Transportation Committee. “We’re going to get one bite at the apple, and I hope we get it right.”

Concern that waiting any longer on road repairs will put drivers at risk and cost taxpayers more is what made Sen. Jim Beall (D), chairman of the Senate Transportation Committee, introduce SB 16, which would raise $3 billion annually for transportation by increasing the gas tax 10 cents per gallon and imposing, increasing or redirecting other vehicle fees.

“This is an urgent crisis that we have to deal with now,” he said. “If we don’t, we’re leaving the next generation an astoundingly expensive problem.”

Gov. Jerry Brown (D) stated his intention to tackle transportation funding in his January inaugural address, but in order for Beall’s bill to get to the governor’s desk it will first have to win the approval of two-thirds of both the Assembly and the Senate. And with Democrats having lost their supermajorities in both chambers, the bill will need Republican support to do that.

But Beall’s bill drew only two “no” votes -- although more abstentions -- from Republicans on its way through two Senate committees, and Senate GOP leader Bob Huff called the measure a “creative” solution to a difficult problem.

“A clean, clear nexus between what’s being raised and how the money is being spent is the magic formula for winning Republican support on this,” he said. (SAN JOSE MERCURY NEWS)

Business Taxes Outstripped by 'Sin Taxes' In MI

Michigan collected twice as much in “sin taxes” from drinkers and smokers than in income taxes from businesses last year, according to an analysis of tax data by The Detroit News. Taxes on beer, wine, liquor and tobacco topped $290 million, while business income taxes -- after taking into account the nearly $769 million in tax credits resulting in part from the sweeping business tax relief package enacted by the state’s Republican-controlled Legislature and Gov. Rick Snyder (R) in 2011 -- netted only about $138 million, much to the annoyance of some Democratic lawmakers.

“I think the pendulum has swung too far,” said Rep. Jim Townsend (D). “The fact that businesses are paying less than smokers and drinkers tells you something about our priorities.”

But Republicans and business groups disagree with that assessment, pointing out that corporations also pay property, utility and other taxes.

“We’re paying more than our fair share,” said Charlie Owens, state director of the National Federation of Independent Business. “We’re not getting sweetheart [tax credit] deals, we’re not getting carve-outs.” (DETROIT NEWS, LEXISNEXIS STATE NET)

Supreme Court Rebukes MD For Double-Taxing Residents

The U.S. Supreme Court has upheld a 2013 Maryland Court of Appeals ruling declaring that the state’s unusual practice of denying taxpayers a credit on the county segment of the state’s income tax wrongly exposes those who earn income out-of-state to double taxation. The justices said that practice violated the Constitution’s commerce clause because it potentially discourages individuals from conducting business across state lines.

With 55,000 Maryland taxpayers who filed returns between 2006 and 2014 potentially now eligible for a refund, the ruling in Comptroller of the Treasury of Maryland v. Wynne could end up costing the state $200 million with interest, potentially necessitating a major property tax increase next year, according to County Executive Isiah Leggett.

“I was hoping we would avoid this,” he said.

The decision could also affect other states with similar tax laws, including Indiana, New York and Pennsylvania. (WASHINGTON POST)

Budgets In Brief - June 1 2015

RI Taxing Big Trucks: A plan in the works in RHODE ISLAND, dubbed “RhodeWorks,” aims to raise $1.1 billion for bridge repairs and road maintenance through the imposition of new highway tolls on big commercial trucks (PROVIDENCE JOURNAL). * WI Considers New Bike Tax: WISCONSIN lawmakers are considering a tax on the sale of new bicycles to pay for infrastructure like bike paths and lanes (WISCONSIN STATE JOURNAL [MADISON]). * IL's Millionaire Tax: A proposed 2016 ballot measure aimed at raising income taxes on millionaires failed in the ILLINOIS House, despite the backing of House Speaker Michael Madigan (D). But Madigan could use the issue to go after Republicans in next year’s legislative races (CHICAGO TRIBUNE). * PA Lottery Tax: PENNSYLVANIA Gov. Tom Wolf (D) wants to subject all state lottery winnings over $600 to the state’s 3.07 percent income tax. Pennsylvania and CALIFORNIA are the only states that currently exempt lottery winnings from income taxes (CBS PITTSBURGH, LEXISNEXIS STATE NET).

- Compiled by KOREY CLARK

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