About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 Elsie M. Watters, State Tax and Fiscal Prospects, 1987 [i] (1987)

handle is hein.tera/tendaects0001 and id is 1 raw text is: Tax Foundation Washington, DC 20005 One Thomas Circle, N.W., Ste. 500 SPECIAL REPORT Telephone (202) 822-9050 State Tax and Fiscal Prospects, 1987 By Elsie M. Watters Consulting Economist Tax Foundation The 49 states holding regular legislative sessions in 1987 are facing a heavy volume of tax bills tl it could lead to a near-record level of statutory tax increases. (Only Kentucky is not holding a regular session.) Peending measures in 29 states would raise taxes by between $7 billion and $8 billion annually, according to a Tax Foundation survey in mid-March. If approved, this would represent the biggest legislative increase in revenues since the $8 billion increase in 1983. According to proponents, the new revenues are needed primarily to raise spending for public education and highways, to offset revenue shortfalls due to poor economic performance and declining oil revenues, and to shore up state financial reserves. Much of the activity involves state response to the 1986 changes in the Federal income tax law, to which most state laws are linked to some extent. More than two dozen states are expected to revise their income tax laws. Most will return to taxpayers any excess taxes that would result from their conformity with Federal law, but some will take advantage of the windfall increases. But the bulk of the new revenues sought will come from other sources, chiefly general sales, motor fuels, and cigarette taxes. Twenty-five states are weighing tax increases that are unrelated to possible windfalls. Only nine of those 25 states, plus four others, plan to retain excess receipts from Federal tax revision. The changes under consideration, by type of tax, are summarized below, followed by a state-by-state summary of proposed revisions. Personal Income Taxes Personal income taxes will be the most revised type of tax in 1987. At least 22 states plan changes in their laws, and another state - Alaska - may levy a new income tax. Most of the states (19) will modify exemptions, deductions, and/or state rates and brackets so as to return all or a portion of the excess taxes that would otherwise result from state linkages to Federal law. These are: Arizona, California, Connecticut, Delaware (part), Georgia (part), Hawaii, Kansas (part), Maine, Maryland (part), Michigan, Minnesota, Montana, New York, Ohio (already enacted rate cuts in 1986), Oregon, South Carolina, Virginia (most), West Virginia, and Wisconsin. On the other hand, at least 11 states plan to retain any windfall increases resulting from Federal tax revision. Three of them - Arkansas, Indiana, and lowa - would revise their laws to do so, either by linking their taxes more closely to the Federal tax or by updating earlier linkages. Eight others are already linked to the current Federal Tax Code and need take no action to avert the windfall. These are: Colorado, Idaho, Illinois, Louisiana, Missouri, New Mexico, Oklahoma, and Utah. In addition to action or inaction in response to the Federal tax changes, several states plan base or rate changes in personal income taxes: Illinois (higher rates), New Mexico (limiting existing rebates), and Utah (repealing deductibility of the Federal tax). Reduction in rates (separate from action on the windfall) may be approved in New York and in Rhode Island (where the tax rate is linked to Federal tax liability and has been adjusted to avoid a revenue loss). North Dakota and Vermont have already raised their tax rates to avoid losses and Nebraska is planning other revisions to avoid losses. Corporate Income Taxes Fewer changes are under consideration concerning the disposition of windfall increases in corporate income taxes resulting from Federal tax reform. Two states - Louisiana and Ohio - took action in 1986 to avert any increases. In nine other states, governors have proposed that excess receipts be returned to taxpayers: Arizona, California, Maine, Montana, New York, North Carolina (where legislators are unlikely to go along), Oregon, South Carolina, and Wisconsin. In another 12 states, governors and/or legislative leaders are recommending that the states retain any revenues resulting from Federal tax revision, often along with changes requiring closer conformity with the new Federal Tax Code. These are: Arkansas, Colorado, Florida, Georgia, Idaho, Iowa, Kansas, Minnesota, Missouri, New Mexico, Oklahoma, and Utah. General Sales Taxes Ceneral sales taxes are likely to be the source of the greatest revenue gains from legislation in 1987. Montana, one of only five states without a general sales tax, may enact one. Fourteen others expect to gain more money from the sales tax, either thugh base- broadening (sometimes coupled with rate cuts) or rate increases. These include: Arkansas, Florida, Idaho, Illinois, Indiana, Minnesota, Missouri, Oklahoma, South Dakota. Texas, Utah, Vermont, Washington, and West Virginia. Temporary increases in sales taxes may be extended or made permanent in Idaho and Texas. Motor Fuels Taxes The need for added iighway funding is likely to lead to legislative increa.es in motor fuels taxes in at least 14 states. States considering such legislation include: Alaska, Florida, Idaho, Illinois, Iowa, Maryland, Michigan, Mississippi, Missouri, Montana, Nevada, New Mexico, Oklahoma, and Utah. Texas may extend a temporary increase. Other Taxes Seven states have reported plans to consider cigarette tax hikes: Idaho, Iowa, Montana, Nebraska,

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most