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Proposed Legislation Would Threaten State and Local Revenues

May 29, 2012

Congress is expected soon to consider legislation that would restrict state and local governments’ ability to levy sales and gross receipts taxes on fast-growing categories of consumer and business purchases like downloaded music and movies, online photo storage, and payroll processing.

As we explain in a revised analysis...

How States Can Close Corporate Tax Shelters

February 27, 2012

Testifying last week before Maryland lawmakers, I explained why the state would benefit from joining the 23 states that have adopted a tax reform known as “combined reporting,” which treats a business composed of a parent corporation and one or more subsidiaries as a single corporation for tax purposes.

States without...

Why Tax Services?

February 15, 2012

Broadening state sales taxes to cover more services makes sense for several reasons, as my new report on estimating the revenue impact of such a step points out:

  • It can generate substantial revenue. States could generate $50-$100 billion annually by taxing all services that
  • ...

States Pressing Out-of-State Retailers to Collect Sales Tax

February 2, 2012

States and localities lose up to $23 billion in revenue a year in sales taxes that are legally due on interstate sales but that online retailers and other “remote sellers” do not collect.  That hurts local retailers, too, since they have to collect sales taxes but their online competitors don’t.

Fortunately, the past week has seen two significant developments in states’ fight to force...

Helping States Level the Sales Tax Playing Field

November 15, 2011

As I’ve pointed out, many states have taken steps in the past few years to chip away at the problem of uncollected sales taxes on Internet purchases, which cost states billions of dollars each year. In an essay in today’s Wall Street Journal, I explain why and how Congress can solve this problem once and for all.

Kicking States While They’re Down

August 17, 2011

With state revenues still well below pre-recession levels, the last thing states need is new federal restrictions on state and local taxing authority — but that’s exactly what they’d get under several bills before Congress.

Batty BATSA Bill Is Back

April 15, 2011

Four members of the U.S. House of Representatives — two from each party — reintroduced a bill recently that would create vast opportunities for major multistate corporations to shelter profits from state corporate income taxes, costing states and localities billions of dollars each year. A Who’s Who of corporate America has been lobbying for the Business Activity Tax Simplification Act (BATSA) for several years. With unemployment still stubbornly high, Congress might be tempted to grasp at anything pitched as “pro-jobs,” but in this case, they’d be doing more harm than good.

Corporations Won’t Flee Illinois’ Corporate Tax Hike

January 14, 2011

Yesterday, Illinois Governor Pat Quinn signed legislation that will increase the state’s personal and corporate income taxes to close a portion of the state’s budget gap (the rest will be closed with spending cuts). Governors Mitch Daniels of Indiana, Scott Walker of Wisconsin, Chris Christie of New Jersey, and Rick Perry of Texas lost no time in chiding the state for the corporate tax increase in particular, claiming that it would make it easier for them to steal Illinois corporations away. Walker and Christie vowed to step up their efforts to do just that.

One Campaign Promise Worth Breaking

November 3, 2010

As newly elected governors confront their states’ grim fiscal reality, one promise that some of them made during the campaign should go in the trash along with the yard signs and the balloons from last night’s victory celebrations: cutting or eliminating their state’s corporate income tax.

Texas Cracking Down on Amazon’s Sales Tax Policies

October 22, 2010

Kudos to sharp-eyed Seattle technology blogger Eric Engleman, who broke the news today that Texas issued a $269 million assessment against last month for failing to collect sales taxes on its sales in the state. Engleman spotted the disclosure in the company’s third-quarter earnings report to the Securities and Exchange Commission, which was issued yesterday.