Maryland’s tax on some out-of-state income is unconstitutional. Maryland gives residents only a partial tax credit for income that is earned—and taxed—outside the state. The US Supreme Court said yesterday that this violates the Commerce Clause by discouraging individuals from conducting business across state lines, since their income would be taxed twice. Residents who tried to claim the credit between 2006 and 2014 will be eligible for up to $200 million in refunds and interest. Four other states have similar laws… but perhaps not for long. TPC’s Howard Gleckman suggests the 5-4 decision may not be the last word in the long-standing debate over balancing the right of states to tax and curbs on their ability to impede interstate commerce.
Are Michigan’s sin taxes more lucrative than its business taxes? Taxes on tobacco, beer, wine and liquor raised $290.5 million in 2014, while business’ net income taxes yielded only $137.6 million. Why? Firms received $768.8 million in tax credits last year, too. Business tax relief came to Michigan in 2011. Net business income taxes are now down 90 percent, and the state’s main operating fund has lost a total of $1.33 billion so far.
Lawmakers and leading economic experts will examine long-term fiscal challenges and opportunities at a fiscal summit in DC today. The Peterson Foundation’s hosts its sixth annual summit. Participants include House Majority Leader Kevin McCarthy, House Minority Whip Steny Hoyer, Senator Michael Bennet and House Budget Committee Chairman Tom Price. Former CBO Director Doug Elmendorf and Housing and Urban Development Secretary Julian Castro will also share the stage, as well as Alan Greenspan, Michele Flourny, Lawrence Lindsey, Richard Fisher and Wendy Kopp.
And on the Hill… Yesterday, Oregon Congressman Earl Blumenauer said he’ll file an amendment to prevent short-term extensions of federal highway funding. He wants to compel Congress to pass a six-year funding bill before the end of the current fiscal year. This morning, the Senate Budget Committee holds a hearing on oversight of the Congressional Budget Office and the Senate Finance Committee holds a hearing on how to reduce reliance on foster care group homes.
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