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With Congress away, the Daily Deduction will not publish for the rest of the week. We’ll be back as usual on Monday, December 1. Happy Thanksgiving!
In California, a tax increase breeds a budget battle and tuition hike. In 2012, Democratic Governor Jerry Brown successfully campaigned for reelection and Proposition 30: A tax increase projected to raise about $6 billion-a-year for the state's general fund and education. Without it, the University of California Regents said dramatic cuts in funding would result in steep tuition increases. The initiative passed, and California increased the UC budget as promised. But UC plans to raise annual tuition by about 5 percent for the next five years anyway, claiming the state’s funding increase was too small. Students are protesting and demanding full transparency of the UC budgeting process. Brown has asked, too.
In Florida, a reelection means more tax cuts. The state cut $500 million in taxes prior to Republican Governor Rick Scott’s reelection, and Scott promises another $1 billion in tax cuts over the next two years. Florida’s next legislative session begins March 3, and with a projected surplus of $336 million, the state’s GOP lawmakers are getting their tax cuts ready. They include reducing taxes on cellphone and cable service, gradually trimming the sales tax on commercial leases from 6 percent to 5 percent, and continuing to reduce corporate income taxes on smaller Florida businesses. Tax cuts will run up against budget needs for schools, transportation and health care.
While in the Northwest, infrastructure needs prompt a request for voter-approved tax increases. The governing board of Washington state’s Central Puget Sound Regional Transit Authority, or Sound Transit, voted to seek a combination of tax increases to help fund expansions of its light rail system and support its bus and commuter-train services. A mix of a new sales tax, an increase in the motor vehicle excise tax, and a new property tax might bring in $9 billion over 15 years. Sound Transit requested inclusion of the measures on 2016 ballots in Snohomish, King, and Pierce counties. It hopes the presidential election year draws young, pro-transit voters.
The House Ways & Means Committee will have new Republican members, but how many Democrats? Four new Republicans join the panel in January: Representatives Kristin Noem of South Dakota, Patrick Meehan of Pennsylvania, George Holding of North Carolina, and Jason Smith of Missouri. Tax Analysts reports they will replace Chair Dave Camp, Jim Gerlach, and Tim Griffin. House Speaker John Boehner and Minority Leader Nancy Pelosi are still negotiating the number and ratio of committees’ majorities and minorities. If Democrats don't lose any seats on Ways & Means, Maryland’s Chris Van Hollen could rejoin the panel, replacing Pennsylvania’s Allyson Schwartz. If Democrats lose two seats, California’s Linda Sanchez could lose her spot and Schwartz would not be replaced.
Can Congress move toward a cleaner and better business environment? Rhode Island’s Democratic Senator Sheldon Whitehouse hopes at least to start a conversation on carbon pricing before the end of this Congress’ term. TPC’s Donald Marron makes the case for a carbon-corporate tax swap: If the US taxed carbon, it could lower corporate income tax rates, reduce carbon emissions, improve investment in alternative energy sources, and make the US a more attractive country in which to do business.
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Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.