Cyber Monday will live to hear another click. Speaker of the House John Boehner has at least temporarily killed the Marketplace Fairness Act. The bill, which would allow states to require out-of-state websites to collect Internet sales tax, passed the Senate last year with bipartisan support. Tax Analysts reports that House Judiciary Committee Chair Bob Goodlatte of Virginia is refining a rather complicated alternative (paywall) to the bill which would have all merchants, whether online, in a catalog, or in a store, collect the sales tax for the jurisdiction where their company is located. As TPC’s Howard Gleckman posited, such an effort “would make our current incoherent system of taxing Internet sales massively worse.”
Tax-free clicks mean some drivers will pay more at the pump. Without some sort of internet sales tax revenue, gas taxes are set to rise in Maryland and Virginia: Both states tied their transportation funding formulas to passage of the Marketplace Fairness act or something similar. In Maryland, the state will not be able to offset 7 cents out of its 20-cent phased-in gas tax hike, set to take full effect by 2016. In Virginia, its wholesale gas tax will jump from 3.5 percent to 5.1 percent on January 1. Virginia lawmakers just rejected a final attempt to stop the increase.
In two other states, gas taxes could rise to save the roads. Now that the election is over, Michigan GOP lawmakers may try to increase the state’s gas tax again this week. A similar effort to raise the 19-cent-per-gallon tax failed this past summer, and the state’s busy roads have only gotten worse. A vote could come tomorrow, but the bill will likely fail. South Dakota may raise its gas tax by two cents per gallon to fix its roads. Combined with higher vehicle fees and other assessments, the tax could raise a total of $100 million for infrastructure. South Dakota hasn’t raised its gasoline tax since 1999, when it boosted the tax 4 cents to 22 cents per gallon.
So why not raise the federal gas tax now, too? TPC’s Howard Gleckman thinks the timing is perfect. “Gas prices are at their lowest levels in years and dropping. Consumers would barely notice if they had to pay a bit more now at the pump. And it might eventually mean less time sitting in traffic.” But, politics will likely reduce a reasonable proposal to just an impossible dream.
Property tax bills fuel dreams of moving out of New Jersey. A new poll finds that half the state’s residents would like to leave. It’s expensive to live there, and survey results show that “the chief culprit… is New Jersey’s property tax burden,” per Patrick Murray, director of the Monmouth University Polling Institute. TPC data show that 79 percent of US property owners paid on average less than $1,750 in annual property taxes between 2007 and 2011, and just 0.2 percent paid more than $8,000. But in six of New Jersey’s 21 counties, (Bergen, Essex, Hunterdon, Morris, Passaic, and Somerset) the five-year average annual property tax bill topped $8,000.
Time keeps on slippin.’ Will two out of three IRA owners pay a huge tax penalty? New research from Fidelity offers a wake-up call to IRA holders over age 70 and a half. Time reports the findings: Among the 750,000 IRA holders required to take distributions and pay taxes by December 31, 68 percent have yet to take their full amount. More than half—56 percent—have so far taken nothing. If the money is not taken out, the IRS assesses a hefty penalty equal to half the amount to be distributed out of the account. As many as 250,000 IRA owners each year miss the end-of-year distribution deadline, according to the Treasury Inspector General. This generates potential tax penalties totaling $175 million.
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