January 31, 2009
What's New?
A plan by Governor David Paterson (D-NY) to raise an additional $4 billion through nearly 100 increased taxes and fees to close his state's budget gap for fiscal year 2010 (which may be as large as $15 billion) contains proposals that move the Empire State closer to, and further away from, sound tax policy, as well as proposals that might be good or bad depending on surrounding circumstances.
In Tax Foundation Fiscal Fact No. 159, "New York Governor David Paterson's Tax and Fee Proposals a Mixed Bag," Tax Foundation Staff Economist Josh Barro notes that many of the improvements in the Governor's plan involve broadening the sales tax base. This includes elimination of the sales tax exemption for clothing, expansion of the sales tax to various services, and the elimination of the tax cap on gasoline. Many of the bad proposals also have to do with sales, including a new sales tax holiday on clothing that would make the tax code more complicated and would not foster more economic activity. Paterson also includes an 18% tax on soft drinks containing sugar, a so-called "obesity tax."
Read "New York Governor David Paterson's Tax and Fee Proposals a Mixed Bag."
More on New York's tax system.
The House of Representatives yesterday voted 289-139 to pass a 156% increase in the federal excise tax on cigarettes (taking it from 39 cents per pack to $1.00, not counting state taxes which average over $1 a pack). The estimated $33 billion tax hike (over 4-1/2 years) would be earmarked to expand the State Children's Health Insurance Program (S-CHIP). The bill is almost identical to a previous version that was vetoed in the summer of 2007, and it will soon go to the Senate.
In Tax Foundation Fiscal Fact No. 158, "Funding S-CHIP with Federal Cigarette Tax Increase is Poor Tax Policy," Tax Foundation experts Gerald Prante and Joseph Henchman argue that a politically popular and expensive program should never be funded by a small, low-income, politically unpopular minority like cigarette smokers.
Read the Tax Foundation Fiscal Fact. More on cigarette taxes here.
Joseph Henchman, Tax Counsel and Director of State Projects at the Tax Foundation, appeared on C-SPAN's Washington Journal to discuss the economic situation facing the states and how individual states are dealing with budgets and related tax issues.
Click here to watch the video.
Tax Watch is the Tax Foundation's quarterly tax policy newsletter, presenting our economic research and analysis in a simple, non-technical format—ideal for the non-economist looking for a clear explanation of current tax issues.
Highlights from the Winter 2009 issue include:
- Recession Blues: Can Reforming Business Taxes Boost the Economy?
- Highest Property Taxes: New Jersey and New York
- Small Business Tax Hike May Be on the Way
Read this issue of Tax Watch (PDF). Click here for a free subscription to Tax Watch.
New data from the Census Bureau show that over a three-year period (2005, 2006 and 2007) average homeowners in New York and New Jersey counties paid the most in property taxes while those in Louisiana parishes paid the least.
In Tax Foundation Fiscal Fact No. 157, "New Census Data on Property Taxes on Homeowners," Tax Foundation Senior Economist Gerald Prante and Analyst Mark Robyn use newly updated Census data from the 2007 American Community Survey (ACS) to rank counties across the country according to various property tax measures.
Read the Tax Foundation Fiscal Fact. View the full table of rankings of median real estate taxes paid by dollar amount or of median real estate taxes as a percentage of the median home value and as a percentage of the median income for household-owning units.
More on property taxes here.
Arguments were heard today before the Indiana Supreme Court in a case urging that the court recognize a judicially enforceable right to a "quality" education.
The Tax Foundation's friend-of-the-court brief in the case, Bonner v. Daniels, was authored by Tax Counsel Joseph Henchman who reported from the State Capitol in Indianapolis where the hearing was held.
"The Indiana Constitution's Education Clause, which guarantees a free public education, was at the center of the discussion," said Henchman. "The justices seemed very skeptical of the notion that this clause empowers the judiciary to order funding increases or even that additional funding necessarily means better schools."
Read the amicus brief or the Tax Foundation Fiscal Fact explaining this brief. Read more amicus briefs submitted by the Tax Foundation.
