Category Archives: Taxation

Behind the teacher strikes that have roiled five states – Why non-union states have seen the most unrest

Source: The Economist, May 5, 2018

From a block away, the striking teachers camped out around Arizona’s capitol at first looked like a solid sea of red, the colour of their T-shirts and tents. On closer inspection, they distinguished themselves the way the teachers have always distinguished their classrooms—with handmade signs. Leah Falcon (“Arizona exports: Cotton, copper, teachers”), who teaches middle-school maths, said she was “fighting because my kids deserve better than 34 students in a class.” Megan Marohn (“Arizona Spending per Student: $9,000. Per Inmate: $24,000”) is a classroom aide and lifelong Republican who frets that Arizona’s Republican legislature and governor “put the value of corporations above students”. Jay Bertelsen (“Christian Non-Union Conservative Teacher Fighting for Funding”) has taught computer science outside Tucson for 25 years; his children qualify for Arizona’s state-subsidised health care for poor families.

Grievances such as these have motivated teacher strikes in five states. They look likely to continue—galvanising public-sector workers in states where Democrats hope to make gains in this autumn’s midterm elections. ….

Why Most States Are Struggling to Regulate Airbnb

Source: Elaine S. Povich, Stateline, May 7, 2018

Jeannette Belliveau lives with her dog and two cats in a 19th century house in the Upper Fells Point section of Baltimore, not far from Johns Hopkins Hospital, and rents out a couple of rooms for short-term stays to make a living.

In other parts of the city, Al Hallivis, a real estate investor and single dad, owns a half-dozen houses that he also rents by the night.

A few miles toward the city’s picturesque harbor, a variety of hotels offer traditional overnight stays.
All three models cater to Baltimore visitors, but that’s where the similarity ends.

Belliveau, Hallivis, and hotels have different business models, different perspectives and different agendas. These competing constituencies help account for the difficulty states have had in regulating and taxing the short-term rental industry, even as some cities have taken action to regulate short-term rentals….

….San Francisco this year began limiting the number of nights a year absentee owners can rent their properties through Airbnb or similar platforms. Owners who live in their residence can rent it out without limit. Owners also must pay a $250 registration fee to the city….

Millionaires Average Annual Tax Cut in North Carolina Is Comparable to Average Teacher’s Salary

Source: Meg Wiehe, Institute on Taxation and Economic Policy, Press Release, May 11, 2018

….The misplaced priorities are evident: The recent tax cuts will provide the state’s millionaires with an average annual tax cut of more than $45,000, which is nearly as much as the average teacher’s annual salary of about $50,000…..

Improving Economic Development Incentives

Source: Timothy Bartik, W.E. Upjohn Institute, 2018

From the Pew Charitable Trusts’ summary:
State and local governments commonly use economic development incentives such as tax credits and exemptions to try to boost their economies by encouraging businesses to relocate or expand within their borders. But such incentives can represent major budget commitments, costing these governments tens of billions of dollars every year. To make the best decisions about which policies to pursue, policymakers need reliable, high-quality tools and methods for evaluating their incentives and ensuring that they yield the intended results.

New research by Timothy J. Bartik of the W.E. Upjohn Institute for Employment Research offers practical guidance. In a recently released report, “Improving Economic Development Incentives,” the institute’s senior economist examines how policy design choices influence the economic impact of incentives and draws some conclusions to help state and local leaders assess and improve their policies.

Amazon Gets Tax Breaks While its Employees Rely on Food Stamps, New Data Shows

Source: Claire Brown, The Intercept, April 19, 2018

Later this year, Amazon will begin accepting grocery orders from customers using the Supplemental Nutrition Assistance Program, the federal anti-poverty program formerly known as food stamps. As the nation’s largest e-commerce grocer, Amazon stands to profit more than any other retailer when the $70 billion program goes online after an initial eight-state pilot. But this new revenue will effectively function as a double subsidy for the company: In Arizona, new data suggests that one in three of the company’s own employees depend on SNAP to put food on the table. In Pennsylvania and Ohio, the figure appears to be around one in 10. Overall, of five states that responded to a public records request for a list of their top employers of SNAP recipients, Amazon cracked the top 20 in four.

Quarterly Summary of State and Local Government Tax Revenues: 4th Quarter 2017

Source: U.S. Census Bureau, G17-QTAX4, March 20, 2018

The summary provides quarterly estimates of state and local government tax revenue at a national level, as well as detailed tax revenue data for individual states. This report produces three tables: Tables 1 and 2 include income and sales data and Table 3 provides tax collections by state.

Fourth quarter 2017 tax revenues for the four largest state and local government tax categories increased 9.5 percent to $438.8 billion, from $400.8 billion in the same quarter of 2016.

Related:
Complete data sets

Economic Development Tax Incentives Evaluation Act: Evaluation of “Motion Picture Production Tax Credits” – Tax Years 2013 through 2015

Source: State of Rhode Island, Office of Revenue Analysis, March 16, 2018

Part I: Introduction

Pursuant to Rhode Island General Laws § 44-48.2-4, titled Rhode Island Economic Development Tax Incentives Evaluation Act of 2013, the Chief of the Office of Revenue Analysis (ORA) is required to produce, in consultation with the Director of the Economic Development Corporation, the Director of the Office of Management and Budget, and the Director of the Department of Labor and Training, a report that contains analyses of economic development tax incentives as listed in R.I. Gen. Laws § 44-48.2-3(1). According to R.I. Gen. Laws § 44-48.2-4(1), the report “[s]hall be completed at least once between July 1, 2014, and June 30, 2017, and no less than once every three (3) years thereafter”. ….

Part II: Benchmarking Motion Picture Activity in Rhode Island, Selected Comparison States, and Nationwide

An understanding of current and historical motion picture production activity in Rhode Island as well as in comparison states and the nation provides context to the economic environment in which the MPPTC program operates. First, the benchmarking analysis contained within this part presents information on the availability of tax benefits targeting the motion picture industry in Rhode Island and in comparison states. Next, this part presents data highlighting current levels and long-term trends in motion picture production activity and employment and evaluate Rhode Island’s relative performance and on key economic indices.

ORA focused its investigation of motion picture activity, employment, and availability of tax incentives targeting motion picture production in four comparison states. The selected states are two neighbors, Massachusetts and Connecticut, in addition to two national leaders in motion picture production, New York and California. Additionally, this report includes selected comparisons to national data to allow the reader to consider the state-level data in the context of national levels, trends, and cycles. ….

Part III: Report Data Description

Part IV: Evaluation of the Economic Impact of the Tax Credit

Part V: Discussion and Recommendations

ORA Recommendations
Finding #1: The statutory goals of the MPPTC are poorly defined and performance measured against statutory objectives is relatively poor. ….
Finding #2: Current data reporting requirements lead to inconsistent and unreliable data on program performance. ….
Finding #3: MPPTC program fails to breakeven; program has negative return on investment. ….
Finding #4: Credit usage is low relative to the annual aggregate cap of $15.0 million, suggesting that the program is out-of-touch with the motion picture industry, and making revenue impacts difficult to predict. ….
Finding #5: MPPTC does contain a sunset provision, representing a best practice of tax incentive design. ….

Related:
Study: RI taxpayers lost $1.8 million a year on film tax credits
Source: Ted Nesi and Steve Nielsen, WPRI, April 16, 2018

State Study Finds RI Film/TV Incentives Generate Only 27 Cents For Every Dollar Spent
Source: Ian Donnis, Rhode Island Public Radio, April 18, 2018

A Macro Analysis of the Return on Investment of the Rhode Island Motion Picture Production Tax Credits
Source: State of Rhode Island, Office of Revenue Analysis, Discussion Paper, July 24, 2008

State Payroll Taxes: A Tool for States to Circumvent the Republican Tax Plan

Source: Dean Baker, Center for Economic and Policy Research (CEPR), February 2018

From the abstract:
The new tax law sharply limits the deduction for state and local taxes (SALT) when calculating federal taxes by capping the deduction at $10,000. While this will not affect most taxpayers, it will affect a substantial number of taxpayers in relatively high tax states like California and New York. This paper suggests an employer-side payroll tax as a tool that states can use to shield most of the tax revenue that otherwise would have been collected through formerly deductible income or sales taxes.

Federal tax law to squeeze local governments in tri-state region

Source: Valentina Gomez, Nicholas Samuels, Leonard Jones, Moody’s, Sector In-Depth, April 11, 2018
(subscription required)

The recent federal tax legislation will have an adverse credit effect on local governments in the tri-state region of Connecticut (A1 stable), New York (Aa1 stable) and New Jersey (A3 stable). This is due to the region’s relatively high state and local taxes and unusually high home prices, particularly in the New York City metropolitan area. The impact, however, will vary from state to state depending on tax levy formulas, fixed cost burdens and state actions to blunt the effect of the federal changes