At the last minute, the House yesterday dropped an extension of Recovery Act assistance for cash-strapped states from jobs legislation, which it then passed, in order to help satisfy congressional critics who complained about the legislation’s impact on the deficit. These critics are effectively saying that the cost of increasing today’s budget deficits outweighs the benefit of helping states avert massive cuts in services and tax increases.
BEYOND THE NUMBERS
A new Congressional Budget Office analysis, which we’ve briefly summarized here, finds that the Recovery Act is continuing to save jobs and protect the economy from what would have been a much worse recession. As of March, the Recovery Act had:
With the House expected to vote today on legislation that includes fiscal relief for states, we’ve updated our reports on state budget cuts and cuts to education programs and jobs. We’ve bulleted and mapped out the highlights below.
“For every complex problem there is an answer that is clear, simple, and wrong.” That line is often attributed to H. L. Mencken, and it’s certainly true about New Jersey, where Governor Christie is proposing a constitutional amendment to limit yearly property tax revenue growth to 2.5 percent.
As states cut everything from education to health care to address historic budget shortfalls, the last thing they need is for Congress to undercut an important revenue source for many of them. But that’s exactly what would happen if Congress eliminated the federal tax deduction for state-level estate and inheritance tax payments.
Misplaced budgetary concerns are impeding major legislation that would create and preserve jobs, continue unemployment and health benefits for those who are out of work, and fix Medicare’s flawed payment formula for physicians for several years.
Despite all the harsh anti-government talk in Washington and around the country, voters in Arizona yesterday did something that will surprise lots of people: they said they wanted to pay more taxes.
What’s going on? Reality is trumping rhetoric — and not just in Arizona.
David Brunori at State Tax Notes discusses our recent report on states taxing low-income residents (we blogged about this here and here) and agrees with our key arguments:
As ABC reports today, Amazon.com is fighting North Carolina’s attempt to collect sales taxes that residents owe on their online purchases. This is one of several ongoing fights between the company and states trying to collect the roughly $8.6 billion they’re owed each year from Internet sales. With states laying off thousands of teachers and taking other painful steps to close huge budget shortfalls, Amazon’s actions are coming at the expense of the public interest.
To help balance the state’s budget, the Vermont legislature has voted to suspend a scheduled increase in an obscure corporate tax break known as the “domestic production deduction.” It’s a sensible move. Other states with this tax break should consider freezing it or, better yet, joining the 22 states that have killed it altogether.