The US Supreme Court nixes a federal ban on state-sanctioned sports betting. The $150 billion underground sports betting economy can come up for air. The nation’s high court ruled yesterday that since Congress has not enacted legislation to regulate such gambling, a federal ban violates states’ rights. Will states now legalize sports gambling and, not incidentally, tax the winnings? Senate Finance Committee Chair Orrin Hatch plans to introduce legislation “to help protect honesty and principle in the athletic arena.”
How has New York State reduced its SALT impact? TPC’s Frank Sammartino reviews the three major changes New York has made to maintain state revenues while giving residents relief from the new federal $10,000 cap on state and local tax deductions. Two changes aim to replace SALT-capped state and local tax payments with charitable gifts that remain fully deductible from income on federal tax returns. The third converts some state individual income taxes into employer-paid (and employer-deductible) payroll taxes. Concludes Sammartino: “We may see the same behavior by [other] subnational governments in response to the disparate treatment of different types of payments made to support state and local government programs.”
Seattle City Council votes unanimously to levy a head tax on larger employers. Yesterday the local body voted 9 to 0 to approve an amended head tax that will fund programs for the homeless population in Seattle. Councilwoman Lorena Gonzalez worked with Mayor Jenny Durkan to secure her support of a scaled down version of the proposal that Durkan said she would veto. The new tax is fixed at $275 per full-time employee (a little more than half the original bill that would have averaged about $500) per year from businesses that gross $20 million or more in revenue each year, and will sunset in 2023. Officials estimate $47.4 million a year in revenue.
Can taxes cure urban blight? Governing considers the efforts of cities that tax vacant property to discourage long-term vacancies that can contribute to blight. Will property owners of both retail and residential spaces respond by leasing, developing, or selling their properties? So far, there’s mixed success.
A new income tax could cure one Michigan city’s debt problem. East Lansing voters may get another chance to pass an income tax this fall, after a similar measure failed last November. This time, a 1 percent tax on residents’ income and 0.5 percent tax on nonresidents’ income would raise $5 million for the city annually specifically for infrastructure, police and fire protection, and payments toward the city’s unfunded pension liability. The city council votes this week on whether to put the proposal back on the ballot.
Some big GOP donors are not giving this year, thanks to the TCJA. CNN reports that they have withheld contributions to House and Senate Republican campaign arms to signal their displeasure with the Tax Cuts and Jobs Act. The donors, hedge fund operators who gave over $50 million to GOP groups in 2016, are not happy with the TCJA’s favorable treatment of corporations compared to partnerships and LLCs. Generally, the TCJA taxes hedge funds at the top individual rate, which Congress trimmed from 39.6% to 37%. The GOP-controlled Congress slashed the corporate income tax rate from 35 percent to 21 percent.
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