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Recent Tax Developments in Other States Texas Taxpayers and Research Association Annual Membership Meeting Austin, Texas October 11, 2007 Council On State.

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Presentation on theme: "Recent Tax Developments in Other States Texas Taxpayers and Research Association Annual Membership Meeting Austin, Texas October 11, 2007 Council On State."— Presentation transcript:

1 Recent Tax Developments in Other States Texas Taxpayers and Research Association Annual Membership Meeting Austin, Texas October 11, 2007 Council On State Taxation

2 2 Overview What Are “Business Taxes”? State Business Tax Trends Budgets & Elections

3 Council On State Taxation 3 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

4 Council On State Taxation 4 State & Local Business Taxes, FY06 Business TaxCollections (billions) % of TotalOne-Year Growth Property tax on business property$ %9.0% Sales & use tax on business inputs Corporate income tax Unemployment insurance Excise taxes Public utility taxes Business & corporate license tax Individual income tax on business income Insurance premiums tax Other business taxes Total State & Local Business Taxes$ %10.2%

5 Council On State Taxation 5 Business Tax Collection Trends

6 Council On State Taxation 6 State Business Tax Trends Gross Receipts Taxes Mandatory Combined Reporting Disclosure NCCUSL & UDITPA, Property Tax Reform, SSTP…

7 Council On State Taxation 7 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 History –WA, WV (repealed 1987), IN (repealed 2002) –Delaware, Hawaii, New Mexico?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

8 Council On State Taxation 8 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

9 Council On State Taxation 9 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”

10 Council On State Taxation 10 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)

11 Council On State Taxation 11 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)

12 Council On State Taxation 12 Tax Administration: COST Scorecard Top StatesBottom States Alaska: ANorth Carolina: D- Arizona: AConnecticut: D Hawaii: ALouisiana: D Idaho: ARhode Island: D Iowa: AAlabama: C- Montana: ACalifornia: C- South Carolina: ATexas: C- Virginia: A

13 Council On State Taxation 13

14 Council On State Taxation 14

15 Council On State Taxation 15 Budgets & Elections K-12 education Medicaid Pension obligations & OPEB Infrastructure Balance of Power: Ds v. Rs

16 Council On State Taxation 16 PIT Liability / Withholding Problems facing Taxpayers –Inconsistent standards for filing / withholding –Selective enforcement / compliance burden 110 th Congress: H.R –100% of wages taxable in resident state –60 day de minimis threshold for nonresidents –All days taxable once threshold reached –Athletes/entertainers not protected

17 Council On State Taxation 17 Questions? Joseph R. Crosby 202/


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