Congress is in recess. The Daily Deduction publishes on Mondays until Congress returns. Happy New Year.
In Maine, the state’s sales tax expands. As of New Year’s Day, the 5.5 percent levy applies to foods found in most gas stations and convenience stores—like granola bars, potato chips, beef jerky, or sports drinks. One shop owner reports he spent 20 hours updating the prices of 1,000 items on the list of new taxable products. The state estimates that the expanded sales tax, designed to offset the cost of income and property tax cuts, will bring in $97 million during fiscal year 2017.
In Pennsylvania, still no budget, but some tax credits are still alive. As the state’s budget logjam headed into its seventh month, Democratic Governor Tom Wolf released emergency funding for schools and social service programs and vetoed some parts of the GOP legislature’s $30.3 billion fiscal plan. The state initially said none of the released money would fund tax credit programs. But on Christmas Eve, it OK’d continued tax breaks for educational donations, research and development, and film production. Some Republican lawmakers think the Governor should have approved not just those subsidies, but all 17 of the state’s tax credit programs.
In Alabama, perhaps a gas tax increase—the first since 1992. Lawmakers will hold meetings around the state this month to see how the public might react to a gas tax hike. “We are going to have to make a decision on what we want,” said Republican state representative Mac MacCutcheon, whose proposed gas tax increase died without a vote in the last legislative session. “If we want to widen some of these roads, fix bridges, do some major work, we have [to have] some revenue.”
In Gilroy, California, some homeowners will receive long awaited tax refunds. About 216 Gilroy homeowners have overpaid their property taxes for ten years. They helped build their own houses in return for below market rate mortgages, on condition that they wouldn’t flip their home at market value. But their homes were assessed at full market value. Neither the project’s developer nor the city ever told the assessor’s office about the mistake. The homeowners will now receive $3.3 million in refunds. One homeowner got $27,836.14 from the county assessor in a Christmas Eve media event.
Does the National Rifle Association need a new tax accountant? The New York Post reports that the 501(c)(4) organization has not listed its PAC, the Political Victory Fund, as an associated organization in its tax filings. The NRA, among Washington’s most powerful lobbying organizations, also reportedly skipped for seven years the question on its tax forms about whether it engaged in lobbying activities. It also claimed no spending on lobbying between 2008 and 2013. In 2014, it told the IRS that it spent $1 million in lobbying, but reported to Congress that it spent $3.4 million. The NRA blamed the reporting lapses on clerical errors.
In Italy, Apple settles it tax dispute. Italian authorities have been investigating the tech giant since 2013, to see whether Apple moved about $1.3 billion in revenue from Italy to an Irish subsidiary to lower its tax bill. Apple and Italy have settled and local reports indicate the firm may be on the hook for as much as $350 million in back taxes.
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- © Urban Institute, Brookings Institution, and individual authors, 2016.