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Overview

Overview. What Are “Business Taxes”? State Business Tax Trends Budgets & Elections. What Are Business Taxes?. Legal v. Economic Incidence All Taxes Fall on Real People: Consumers, Employees, Owners Legal Incidence Matters Legal incidence affects economic incidence Voters aren’t economists.

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Overview

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  1. Overview • What Are “Business Taxes”? • State Business Tax Trends • Budgets & Elections

  2. What Are Business Taxes? • Legal v. Economic Incidence • All Taxes Fall on Real People: Consumers, Employees, Owners • Legal Incidence Matters • Legal incidence affects economic incidence • Voters aren’t economists

  3. State & Local Business Taxes, FY06

  4. Business Tax Collection Trends

  5. State Business Tax Trends • Gross Receipts Taxes • Mandatory Combined Reporting • Disclosure • NCCUSL & UDITPA, Property Tax Reform, SSTP…

  6. Gross Receipts Taxes: Next Big Thing? • History • WA, WV (repealed 1987), IN (repealed 2002) • Delaware, Hawaii, New Mexico? • Today • New Jersey (sunsets after 7/1/2006) • Kentucky, Michigan, Ohio, Texas • Tomorrow: Illinois, ??? • COST Study & Policy Position

  7. Unitary Combined Reporting Rises Again • Combined Reporting for CIT • 17 states (including VT, 2005) • NY? (2007), MI (2008), WV (2009) • 2007 proposals: IA, MD, MA, MO, NM, NC & PA • MTC Model • COST Position • Combination (or Consolidation) for Non-Income Taxes: KY, OH, TX

  8. Disclosure • Reportable Transaction Statutes: • 2004: CA • 2005: IL, CT, MA, MN, NY • 2006: UT, WV • 2007: OR (MT legislation failed again) • MTC Model & “51-State Spreadsheet” • CBPP & “Full Disclosure”

  9. NCCUSL & UDITPA • National Conference of Commissioners on Uniform State Laws (NCCUSL) • Independent, lawyers appointed by each state • e.g., Uniform Commercial Code • Uniform Division of Income for Tax Purposes Act (UDITPA) • Promulgated by NCCUSL in 1957 • MTC requested review • Issues • Process (and MTC Compact)

  10. Property, Sales & Other Taxes • Personal Property / Franchise Tax Cuts • “Property Tax Reform” • Usually only residential real estate taxes • Usually shift taxes to business • SUT Base Expansion (IL, MI, NJ, PA) • SUT Increase (FL, ID, SC) • Attacks on SUT Refund Process (GA, TX)

  11. Tax Administration: COST Scorecard

  12. Budgets & Elections • K-12 education • Medicaid • Pension obligations & OPEB • Infrastructure • Balance of Power: Ds v. Rs

  13. PIT Liability / Withholding • Problems facing Taxpayers • Inconsistent standards for filing / withholding • Selective enforcement / compliance burden • 110th Congress: H.R. 3359 • 100% of wages taxable in resident state • 60 day de minimis threshold for nonresidents • All days taxable once threshold reached • Athletes/entertainers not protected

  14. Questions? Joseph R. Crosby 202/484-5225 jcrosby@statetax.org

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