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Governor LePage wants big tax cuts for Maine. Republican Paul LePage’s new budget proposal would cut the top income tax rate by 2.2 percentage points to 5.75 percent, and apply it to single tax filers with incomes over $50,000, instead of the current threshold of $21,200. The plan would cut individual tax revenues by $1.2 billion through fiscal year 2018. LePage, who says his ultimate goal is repeal of the income tax, would also end the state’s estate tax and income tax on pensions but boost the sales tax from 5.75 to 6.5 percent and eliminate exemptions. In 2014, he vetoed a supplemental budget bill because of a 0.5 percent sales tax hike. His proposal, unveiled Friday, is similar to one passed by the state legislature in 2009 but rejected by voters in 2010.
Governor Branstad sees little room for tax cuts in Iowa. Two years ago, Republicans and Democrats came together to enact the largest tax cut in Iowa’s history. But reductions in the income tax and commercial property taxes have forced the state to tap its rainy day fund to meet long-term commitments. Republican Terry Branstad is not likely to call for a major tax code overhaul or tax cuts in his “Condition of the State” address tomorrow, saying “I’m trying to be realistic and put together a budget… that I think has a realistic chance of being approved.”
Washington State’s sales tax collection rules are hazy for medical marijuana dispensaries. An estimated 117 of 443 such dispensaries owe about $9.5 million in sales tax. Unlike recreational marijuana shops, medical marijuana dispensaries are not licensed to sell weed. Their business model: Growers donate the dope. Consumers make donations to help support the growers. Many proprietors insist the government can’t force them to pay state sales tax since by doing so they’d be admitting they are breaking federal law that bars sale of marijuana. They say they’d have to share medical records with the state and think joining the new tax-paying cannabis industry means you “pay to play.”
Swings and misses: State tax bases have been moving targets. A new report from the Pew Charitable Trusts finds that the three states with the highest tax revenue volatility are Alaska, Wyoming and North Dakota. Their revenues from severance taxes on extraction of nonrenewable resources like oil or natural gas are affected by global energy prices. Tax bases in Kentucky and South Dakota have been the most stable: Kentucky collected most of its revenue from personal income and sales tax; while South Dakota relied primarily on sales tax.
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