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.
BEYOND THE NUMBERS
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.
To follow up on last week’s post on state taxes and the working poor (and TAPPED’s post on our recent report), these maps show the progress states have made over the past two decades in eliminating income taxes on working-poor families.
As today’s USA Today details, policymakers, unions, and celebrities are speaking out against large-scale teacher layoffs across the country — the Obama Administration estimates that as many as 300,000 teachers could lose their jobs. School districts face tough spending choices due to state budget cuts and an end to federal Recovery Act funding.
Analyzing the new GDP figures issued Friday, which showed state and local spending falling at the fastest rate in three decades, Matt Yglesias made the important point that the large cuts in state and local spending are a drag on the economy. The new figures are just the latest evidence that Congress should extend the Recovery Act’s fiscal relief to states.
Just before midnight last night, Georgia’s legislature voted to eliminate a tax credit for 1 million workers earning under $20,000, joining several other states that are cutting (or considering cutting) tax benefits for low-income families. While states face severe budget pressures due to the recession, sacrificing their low-income tax credits is a terrible idea, for a host of reasons:
Over the past two decades, a number of states have recognized the folly of taxing working-poor families deeper into poverty and, instead, have eliminated their income taxes on poor — and, in some states, near-poor — households. But our new survey finds that 13 of the 42 states with an income tax still tax two-parent families of four with earnings below the poverty line ($21,947).
The deep cuts in public services and millionaire-friendly tax policies that New Jersey Governor Chris Christie has proposed have made him a poster child for good governance for conservatives like Fred Barnes and George Will. But his proposals also highlight — if unintentionally — the need for a better, balanced approach to meeting public needs despite a recession-fueled plunge in state revenues.
The New York Times reports that hundreds of thousands of teachers across the country could face layoffs in June, as state revenues remain weak and federal Recovery Act assistance will soon dry up. (The Washington Post has a similar story.)
Critics who claim the new health reform law’s Medicaid expansion will place an unaffordable burden on states ignore the fact that the federal government will cover virtually all of the cost. They also ignore the ways in which the law will save states money.