Category Archives: Taxation

New York’s “Amazon Law”: An Important Tool for Collecting Taxes Owed on Internet Purchases

Source: Michael Mazerov, Center on Budget and Policy Priorities, July 23, 2009

From the summary:
The inability to collect all sales taxes that are legally due on purchases made over the Internet costs states billions of dollars a year in lost revenue. In 2008, New York State enacted an innovative law that helps to address this problem. Rhode Island adopted a similar measure this year. All states with sales taxes should give serious consideration to doing so as well.

Should Social Security Rely Solely on the Payroll Tax?

Source: Alicia H. Munnell, Center for Retirement Research at Boston College, Issue Brief, IB #9-16, August 2009

From the summary:
It’s no secret that Social Security is facing a long-term financing shortfall. This problem can be solved only by putting more money into the system and/or by cutting benefits. There is no silver bullet. So the following discussion is not to suggest that there is an easy way out, but rather to explore whether the entire financing of the Social Security system should rest on the payroll tax. The payroll tax may be a perfectly reasonable way for current workers to pay for their benefits. But is it the right tax to finance the costs left over from paying benefits far in excess of contributions to early generations?

This brief explores the question of the appropriate tax, or combination of taxes, to finance Social Security. Since the need for more revenues gives the question increased currency, the first section briefly describes Social Security’s financial outlook. The second section then describes the payroll tax. The third section explores whether the whole cost of the Social Security system – the contributions necessary to generate current benefits and the contributions required to make up for giving early participants benefits far in excess of their contributions – should be financed in the same way. The fourth section concludes that perhaps a portion of Social Security financing could be transferred from the payroll tax to the income tax. It would mean higher income taxes, but the burden of the “legacy debt” would be borne more broadly.

Coping with Effects of Recession in the States

Source: Donald J. Boyd, Nelson A. Rockefeller Institute of Government, July 27, 2009

States are responding to historic drops in revenue by enacting the largest tax increases in decades, and growing budget gaps will likely lead to further tax increases and spending reductions, Institute Senior Fellow Donald J. Boyd told a meeting of the Governmental Research Association on July 27.

State Tax Decline in Early 2009 Was the Sharpest on Record

Source: Donald J. Boyd and Lucy Dadayan, Nelson A. Rockefeller Institute of Government, State Revenue Report, No. 76, July 2009

State tax collections during the first quarter of 2009 showed the sharpest decline on record, dropping 11.7 percent overall, according to a new Rockefeller Institute report. The decline in personal income tax was particularly sharp, with an unprecedented decline of 17.5 percent, as the weakened economy continued to hammer state budgets. Forty-five of the 50 states experienced revenue drop-offs. Early figures for the second quarter reveal continued, broad worsening of fiscal conditions for states. Local tax revenue, meanwhile, remains relatively steady.
See also:
Press release

April Is the Cruelest Month

Source: Lucy Dadayan and Donald J. Boyd, Nelson A. Rockefeller Institute of Government, State Revenue Flash Report, June 18, 2009

From the press release:
States that collect personal income taxes continued to suffer sharply declining revenues as the April 15 deadline for filing tax returns delivered troubling news, according to a Rockefeller Institute of Government report issued today.

The report — “April Is the Cruelest Month” — examined January to April tax collections for 37 of the 41 states that impose broad-based personal income taxes. It showed an overall decline of 26 percent, or $28.8 billion, when compared to the same period a year earlier. April income-tax collections were even worse than those in the preceding quarter, with a drop-off of $18.2 billion when compared to April 2008. April is the month during which states collect the most income tax revenue, because of the filing deadline.

Significant Features of the Property Tax

Source: Lincoln Institute of Land Policy and the George Washington Institute of Public Policy, 2009

This new site provides data sets and links relating to the property tax and its role in state and local finance in all 50 states. The interface allows users to access property tax and data online in a variety of forms, including tables of the most frequently sought figures, a query system for creating new tables, and a downloadable database. This data will be of value to a wide variety of users, including journalists, public officials, and researchers.

State Tax Performance Through April 2009

Source: William T. Pound, State Policy Reports, Vol. 20, Issue 13, June 2009

From the summary:
The national recession is pummeling state revenues. Those states with heavy reliance on personal income taxes are experiencing deep declines, especially in their April 2009 collections. But other major taxes are faltering, too. Even the handful of states that have weathered the economic decline reasonably well are starting to report adverse revenue developments. Nationally, the news is alarming. More than half the states reported that through April, year-to-date revenues from every major tax source were below collections when compared to the same period last year, and many by significant margins.

Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index

Source: American Legislative Exchange Council, 2009

From the press release:
In the midst of economic turmoil, federal bailouts, and budget deficits in more than 40 states, a new report from the American Legislative Exchange Council (ALEC) offers a roadmap to recovery based on economic performance trends from states over the last 10 years. The second edition of Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index shows how the federal bailout of the states may simply encourage out-of-control spending by states, which is up 124 percent over the last 10 years, without requiring them to make the tough decisions needed to bring about financial stability.

When Cities Are Too Generous

Source: Andrew Thompson, Next American City, Wednesday, May 27th, 2009

Budget season is here, which means jettisoning the long-term strategies birthed in the idyllic days of budgetary prosperity. Or if not jettisoning, at least reconsidering. Expansion of public transit gives way to finding drivers, youth monitoring programs disappear and are replaced by the tried-and-true method of jailing, and plans to plant trees are replaced by the realization that we had enough trees all along. And taxes, the lowering of which is the cornerstone of any city’s long-term growth strategy, stop their declines or return to the higher levels they knew before “tax relief” entered the lexicon of strategists’ vocabulary.

Obviously, backtracking on the tools used for growth is something no city wants to do, but it’s good time for cities to wonder if they overshot their tax abatement programs the whole time. It’s easy to look at growth in a city, then look at the tax abatement program and decide that one wouldn’t exist without the other. Largely, it’s often true, but that doesn’t mean growth would only have occurred with the programs in their current forms. It’s important to reevaluate equilibriums to maximize benefit, and if cities can make more money without hampering growth, this is the time to figure it out. Right now, an overly generous tax abatement looks like a city throwing money into the streets standing out the sky roof of a limousine, even though that limo is about to be repossessed.