If you ask a Mainer about taxes, you’re liable to get an earful: Mainers have one of the highest tax burdens in the nation. Nonetheless, on election day, Maine voters turned down proposals to cut taxes.

In a slow economy, Maine voters were leery of a proposal that would result in cuts in services. The controversial ballot issue, Question 4, asked voters if they wanted to limit future increases in state and local government spending and taxes to the rate of inflation plus population growth. The measure was known as the Taxpayer Bill of Rights campaign, or TABOR. Those opposed to the measure referred to it as “TABOR II” since a similar proposal was turned down in 2006.

Those in support of TABOR claimed that the bill would put more money back in taxpayer’s pockets. Critics wondered what the actual result of would be, as many state and local services were already facing cuts. Public schools are already operating under frozen budgets.

Voters also rejected a proposal to cut excise taxes on some vehicles and exempt hybrid and fuel-efficient vehicles from sales tax. Measures to encourage the purchase of cleaner cars are popular in states like Colorado but critics feared that tax cuts would have to be made up somewhere else. In that way, it wasn’t so much a tax cut as a shift in taxation.

While tax measures on the ballots were overshadowed by publicity over questions about making medical marijuana more available (yes) and gay marriage legal (no), the tax votes may be indicative of the mood of the nation on the eve of a huge election year… Only time will tell.Similar Posts:

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Despite three campaign appearances by President Obama, Governor John Corzine lost his gubernatorial seat in New Jersey to GOP challenger Chris Christie last night. Exit polls showed that the top two concerns for New Jersey voters were the economy and the state’s high property taxes.

How high are those property taxes? For the year 2008, New Jersey holds the distinction of the state with both the highest property taxes per capita and the worst business tax climate in the nation, according to the Tax Foundation (note: report will download as a pdf). New Jersey residents also ranked highest in the nation last year with respect to state and local taxes as a percentage of income. New Jersey taxpayers paid a whopping 11.8% of income in state and local taxes, more than 2% above the national average.

Of course, this is nothing new for New Jersey. Residents have generally put up with higher taxes because of what they thought it bought them: some of the best schools in the country, for example. But in the midst of a bad economy, that has changed. New Jersey residents increasingly believe that higher taxes buy them very little (ask Robert Flach) except possibly more corruption.

Governor (for now) John Corzine became the first New Jersey governor to lose a re-election bid since 1993, when then Governor Jim Florio lost to an up and coming GOP challenger Christie Todd Whitman. Whitman, who made cutting taxes a priority in her campaign, later bit at an offer by President Bush clearly intended to knock her out of the public eye and into obscurity.

So what does that mean for New Jersey residents? Luckily for them, they can only go down from here.

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tax, New Jersey, Corzine, Christie, property taxes

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Times are tough in Chicago. You can only tax the citizenry so much – and Chicago already shares the distinction of being one of the most taxed cities in America.

The solution? Enforcement. No big surprise there.

But enforcement costs money. What if you could get your enforcement for free? What if… you could convince taxpayers to rat each other out? Brilliant. And so, Chicago Mayor Daley has introduced a “Tax Whistleblower Program” for 2010.

The program would reward taxpayers who turn in those with unpaid business taxes. Taxpayers who successfully bring in money to the city would receive a percentage as blood money bounty.

A good way to destroy the competition, perhaps? The Revenue Department is counting on it. Ed Walsh, a Revenue spokesperson says: “It would probably be … a business knowing that a competitor is not remitting a tax. An employee [of the tax-dodging business] could know that, too. Typically, you need to provide some type of incentive.”

Nice.

This way, all businesses in Chicago could live in fear of their competition – and their neighbors. But a little fear is healthy, right?

Who knows if other cities will follow suit? I’m setting up my telescope, just in case…
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When Top Gear’s Jeremy Clarkson reviewed the electric sports car Tesla Roadster, he had plenty to say. Notably, he complained about the price, which was at the time of filming in the UK, £92,000 (about $150,962.40 US). Lucky for all of you prospective Tesla Roadster buyers, the price has dropped to a mere $109,000. And if you moved to Colorado, you could get your hands on it for a mere fraction of the price.

Colorado? Yeah, you read that right. Colorado is offering a 38% tax credit on the Roadster through the end of the year. That brings the total cost of the Roadster to about $65,000.

It’s not just the Tesla that can take advantage of the credit. It applies to your run of the mill Prius, too. In fact, Colorado is ahead of the pack when it comes to providing tax breaks for hybrid and zero-emission vehicles. The state has been doing it for years.

But it’s the size of the Tesla refund that is attracting attention.

Bowing to pressure from overextended taxpayers, state lawmakers passed a bill which would cap such refunds at $6,000. The bill, however, doesn’t take effect until next year. That means that there’s still plenty of time to take advantage of the refund this year.

Though state lawmakers didn’t expect to see more than 10 Tesla refunds, one Tesla dealership has reported selling six cars this week alone. That’s about $252,000 in refunds in one week. That’s not a pace that taxpayers are happy to see when faced with a $320 million deficit in the state budget.

Of course, there are some restrictions on the refund. For one, to qualify, the vehicle must be titled and registered in Colorado. And the credit is only available in the year that the car was purchased.

However, since it’s a tax credit (and not a flat out dollars back refund), there is a chance that the amount of the credit could exceed a taxpayer’s net tax liability for the year. If that happens, any excess credit may be carried forward and claimed on future year returns for up to five years.

So, it may not turn out be the kind of hit that taxpayers fear. That still doesn’t make taxpayers feel better about what’s perceived as an irresponsible tax policy. The amount of the refund alone, it has been noted, is more than many taxpayers will pay for the total cost of their car. In a tight economy, this isn’t the kind of thing that sits well with many folks.

What do you think? Fair game or bad policy?

And if you’re interested, you can watch the controversial “Top Gear” review of the Tesla Roadster here:

(In case you missed the scandal, the BBC later admitted that the scene of the car being pushed into the garage was not a result of the alleged 55 mile fail.)

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Tesla Roadster, Jeremy Clarkson, electric car, Colorado, tax credit

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Stephanie Dean and Stefani Hovarter (yeah, I know!) have filed a lawsuit against Feed The Children for wrongful dismissal. Dean and Hovarter claim that they were fired after pointing out to the charity that more than $1 million was owed to the State of Oklahoma.

The tax allegedly owed is in the form of use tax. Use taxes are roughly the equivalent of sales tax and are owed when sales tax is not paid. Dean and Hovarter noticed the discrepancy for the time period January 1, 2002 to June 30, 2009, and alerted officials at the charity. They also advised that there may be similar amounts due in other states. The pair then alleged that Christy Tharp, CFO for Feed the Children, was aware of the problem and chose not to report it, instead hoping that the statute of limitations would run.

On September 17, the accountants notified the Tax Commission of the discrepancy. After the disclosures, Dean and Hovarter were fired on September 29. They filed suit 2 weeks later, seeking lost wages, emotional distress and punitive damages.

Feed The Children has not offered any comment.

My two cents on the suit? Unless there’s a written contract that says otherwise (and I don’t know that there isn’t), Dean and Hovarter may be out of luck. In the US, for the most part, employment laws are favorable to employers. Most employees are considered “at will” which means I can fire my employees for wearing yellow to work if I wanted. However, there’s one big exception that might apply: if their actions fall under one of the whistleblower statutes, there might be some additional protection. I have not seen the actual text of the lawsuit, so I’m not sure if they’re playing that card or not… I’ll let you know when I find out.Similar Posts:

None Found

Philadelphia is a town known for its scrappy sports teams and its passionate fans. We’ve collectively cheered our world champion Phillies and wrung our hands over last minute Eagles’ losses. We’ve booed the drafting of Donovan McNabb, cheered Brad Lidge, mourned our beloved Harry Kalas and thrown snowballs at Santa. We’ve stood along Kelly Drive and screamed for half-marathoner Ryan Hall and cyclist George Hincapie and endeavored to catch a glimpse of Bill Cosby at the Penn Relays.

It’s rare that the worlds of sports and art collide in Philly in any kind of remarkable way. Until last month, the biggest challenge as between the two was figuring out where to put the infamous Rocky statue: it’s not quite art but reportedly, art museum attendance plummeted when the statue was moved to the sports complex. (It’s now back home at the museum.)

But that was before Harrisburg got involved. The state budget deal, which allowed Philadelphia to increase its sales tax by a penny in an effort to keep the city going, has one teensy little provision that’s getting quite a bit of press: an extension of the state sales tax to cultural performances and venues. Cultural performances and venues applies to the arts and music – but not to sports or movies. So yes to taxing the Cezanne exhibit at the Philadelphia Museum of Art, no to taxing “Zombieland” at the cinema. Hmm.

The deal would call for the creation of a special new fund for cultural institutions and the arts, including museums, orchestras, dance venues, theaters and zoos, previously budgeted as part of the general fund. Money from the general fund to the arts has already been cut due to budgetary restrictions and some venues, like historical museums and sites, have seen their budgets eliminated.

The idea is that *some percentage* of the the new tax (lawmakers have been silent as to the exact amount) would be used to establish the fund – it’s a bit unclear where the rest of the money would go. State Republicans, who had previously opposed new taxes, insisted on the tax expansion in reaction to revenue shortfalls. Supporters of the arts looked to Gov. Rendell (D) for help, but he suggested that tax increases were inevitable, with his spokesman claiming “we cannot do a budget without pain.”

In a cash strapped year, with revenues down, cuts are to be expected. Many in the City, myself included, admitted that they would prefer to see an expansion of the sales tax to save the arts over cutting other services, like police. But why not movies and sporting events?

One city resident that I spoke with suggested that it felt like “rural Pennsylvania’s chance to thumb its nose at the City” since a majority of the tax would be created and spent in Philadelphia. An interesting take, for sure, but not quite accurate. The tax would apply across the board to arts and cultural venues in the state. It would not just affect the Philadelphia Museum of Art and the Pennsylvania Ballet but also the Elmwood Zoo and the Michener Art Museum. It would not, however, affect the Eagles or the Steelers. You have to wonder why not.

Groups across the state have been working to scale back the tax expansion with varying amounts of luck. There have been, at times, rumors that the tax may now exclude nonprofits but include for profits; that zoos and museums may be excluded; that concerts at stadiums may be included but those at an actual hall may not… Rumors, all, and nothing substantiated. In fact, at this point, we’re not at all quite sure what will come out of any compromise bill.

Of course, it’s worth noting that our neighbor to the north, New York, decided not to tack on an additional tax for tickets after those who worked in the arts noted the domino effect that the tax might have. Reduced ticket sales means fewer customers for restaurants, hotels and retail shops. Fewer customers means lost revenue – lost revenue means layoffs. Layoffs mean less wage and income taxes. You get the picture.

It’s easy to think that tax cuts – and tax increases – happen in a vacuum but they don’t. Taxes are an integral part of our day to day lives. How we choose to prioritize those taxes, I think, says a lot about us.Similar Posts:

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Philadelphia joined a host of other cities and towns – as well as states – across the nation hanging up “closed” signs on government funded institutions. Just months after Chicago ordered non-unionized employees to take unpaid furloughs and Hawaii warned of state employee furloughs, signs on Philadelphia public libraries and recreation centers warned of impending shut downs. The Free Library of Philadelphia, which once held the world’s largest circulation of books, warned:

As a result of the state budget crisis and legislation impasse, the entire Free Library of Philadelphia system is set to close October 2nd.

So, how did it come to this? Shutting down libraries, recreation centers, and other services? These shut downs are on top of other recent shutdowns (including my local firehouse).

Of course, there’s a budget crisis. Not enough revenue coming in. We get it, we’ve heard similar horror stories in other places. The recession has hit state and local coffers hard – not a day goes by practically that you don’t hear the Governors of New Jersey or California warning about budget shortfalls.

But in Philly, we have something worse than revenue shortfalls: the dreaded “legislation impasse.” And here’s how it works…

Philly needed extra revenue. After considering a host of options, Council and the Mayor agreed to a “temporary” (*cough*) increase in the sales tax of 1%. In Pennsylvania, the sales tax rate is currently 6% with a 1% increase in Philadelphia. So if you spend your dollars in Philly (and we certainly hope that you do), you pay 7% sales tax. With the additional increase, Pennsylvania sales tax would remain at 6% but Philadelphia sales tax would increase to 8%. Even with the additional increase, the sales tax would remain below that of other major cities, including Chicago, New York City and Los Angeles.

So, with that in mind, everyone nodded agreeably and the proposal was made to the Commonwealth that the sales tax be increased. Under the Pennsylvania Charter, increases in sales tax must be approved by the state legislature. Philadelphia submitted its proposal and held its breath.

The legislation was approved in the House. The increase would allow Philadelphia to raise its sales tax and temporarily defer pension payments. When it made it to the Senate, the legislation was amended to allow the state to step in and manage “Level 3 distressed municipal pensions.” Level 3 pensions are those funded at less than 50% – in Pennsylvania, currently Pittsburgh fits that bill, coming in at just 31% funded. The Senate also insisted on a pension freeze and reductions in benefits for incoming municipal workers.

And that’s where the sales tax increase got de-railed. The GOP won’t vote yes on the sales tax increase unless the other concessions are included. The Democrats, facing considerable pressure from organized labor, won’t agree to include the cost-cutting provisions. The result? A legislative impasse.

What’s a legislator to do? Here’s a thought: make them separate issues.

The GOP and the Dems both agree on a sales tax increase for Philly. City Council and the Mayor agree on a sales tax increase for Philly. Should be end of story.

But politicians like the idea of leverage. They like the notion that they can hold bills hostage while tacking on new, controversial and generally unrelated measures (that’s why, for example, the credit card reform bill that passed Congress this fall included language to allow concealed weapons in national parks). And so Senate Majority Leader Dominic Pileggi (R – Del) has said that there will be no compromise to split the bill.

Hey, I like Pittsburgh – but what does their distressed pension system have to do with my Philadelphia sales tax? Exactly. Nothing.

So, while legislators in Harrisburg argue about pension plans and benefits for union workers, signs are being tacked up on libraries announcing closures. Trash pick up may be reduced in the City. Letters informing workers that they’ve been let go are going out next week (a good friend has advised that her entire department will be receiving them). The Fire Commissioner will announce six engine and three ladder companies, plus five medic units, which will close. Two health centers are closing. Thanks, Harrisburg.

If you live in Philly, you should be angry. Angry that this has been allowed to happen. And if you live further afield – whether in West Chester or Pittsburgh – or even in Boise, Idaho, you should be concerned that so much of our tax policy has nothing to do with taxes at all: it’s about politics.Similar Posts:

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In just a little under three hours, the Philadelphia Eagles will hit the field for the third of their four pre-season games. So far, they’ve given their fans nothing to cheer about. They have, however, given them plenty to talk about – not the least of which is the signing of former bad boy (and felon) Michael Vick.

Michael Vick, who pleaded guilty to “Conspiracy to Travel in Interstate Commerce in Aid of Unlawful Activities and to Sponsor a Dog in an Animal Fighting Venture”, is set to make his Eagles debut tonight against the Jacksonville Jaguars. The debut follows a conditional reinstatement for Vick by NFL Commissioner Roger Goodell.

Several teams expressed interest in Vick who had made quite a splash in the NFL during his early tenure. He still holds records for the most rushing yards by a quarterback in a single season (1,039 in 2006), highest average per carry in a single season (8.45 in 2006), 100-yard career rushing games by a quarterback (eight), best two-game rushing total (225 in 2004) and rushing yards in a single game (173 in 2002). But in a move that stunned almost everybody (including this Eagles fan), the Philadelphia Eagles signed Vick to a 2 year contract. Yeah, I thought he was going to the Steelers, too.

As it turns out, it’s a move that the Eagles could have received some tax benefits for… The Eagles could have recuperated some of the $1.6 million contract with Vick via a $10,000 tax credit offered to employers by the Mayor’s Office for Re-entry of Ex-Offenders (MORE). The credit was added to the existing program (which includes opportunities for education and job training) to encourage businesses to hire ex-offenders. So far, reportedly only six businesses have taken advantage of the credit. Would the Philadelphia Eagles be lucky #7 (ironic, since that’s Vick’s Falcons number)? Not this time. A team spokesperson told the Philadelphia Daily News that wasn’t going to happen.

But the move has put a new emphasis on the tax credit. According to the Mayor’s Office, there are approximately 298,400 adults living in Philadelphia who have a criminal background and who are technically ex-offenders. That’s more than a quarter of a million people. A quarter million potential employees. A quarter millions potential taxpayers. A quarter million potential actual contributing members of society.

Or we could just continue to pump money into the prison system by choosing to pretend that it’s not a problem (approximately 40% of offenders go back to jail, as high as 70% in California).

Philadelphia is opting for the former and choosing to believe in second chances – in more ways than one. Statistics suggest that ex-offenders with sustainable jobs remain ex-offenders, a finding that isn’t lost outside of Philadelphia. Kansas, Illinois and Iowa are just a few of the states that offer similar programs. The feds also offer an incentive in the form of a Work Opportunity Tax Credit. A business which hires a qualified ex-felon (defined as “an individual who has been convicted of a felony and has a hiring date which is not more than one year after the last date on which he was so convicted or released from prison”) may be entitled to a federal tax credit in the amount of $2400. Other target groups, including disabled vets, are also included in the program. George W. Bush re-authorized the bill in 2006 and expanded in 2007, once remarking, “America is the land of the second chance – and when the gates of the prison open, the path ahead should lead to a better life.”

While the Eagles take a pass on this tax break, maybe other local employees will give it a second look.

But for tonight, are you ready for some football?

Hat Tip: @jmnaylor via Twitter

(Image by Keith Allison from Baltimore, USA under Creative Commons Attribution ShareAlike 2.0 License)

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I previously blogged that Seattle was contemplating a tax on plastic bags which managed to garner a decent amount of support. Clearly, the initial support wasn’t enough.

Seattle voters firmly rejected the measure in a vote this month. The bill, had it passed, would have made Seattle the first city to tax both plastic and paper shopping bags. The measure would have required certain retailers to tack on an additional 20 cent tax per bag. The idea was that the tax would have served as an incentive to stop using disposable bags.

Supporters of the measure were disappointed but not swayed from their cause. They noted that their opponents spent nearly 15 times more than they did on advertising, lead by the American Chemistry Council, and yet the measure was defeated by only a factor of 3 to 2. For the supporters, it was a good first step.

Those in opposition to the measure were pleased to see it rejected, referring to it as “costly” and “unnecessary.”

So the matter is done… for now. There’s no doubt that it will be raised again. 2010 anyone?Similar Posts:

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Welcome to my seventh in a series on state taxes! For information about what I’m trying to do, read my introductory bit. Next on the agenda, Connecticut (home of the Connecticut Employment Lawyer Blog).

CONNECTICUT

Population: 3,501,252 (29th)

Capital: Hartford

Largest City: Bridgeport

Gross Domestic Product: $204 billion

GDP per capita: $54,117 (1st!)

2008 election winner: Barack Obama

web site: http://www.ct.gov/

Income Tax

Connecticut does collect personal income tax. Taxes are divided into two tax brackets of 3% and 5%. All wages of a Connecticut resident are subject to the state’s income tax, even when the resident works outside of the state. However, as with many states which have bedroom communities to major metro areas, tax is only collected when it exceeds tax in the other state. Since everyone many high-earning wage earners who live in Connecticut work in New York, those folks pay no income tax on those wages to Connecticut. The income must still be reported on the return, however, in order to receive the credit for taxes paid to New York another state.

Connecticut taxpayers must generally file an income tax return if they lived or worked in Connecticut for part or all of the year. Income thresholds apply, starting at $12,000.

Your filing status for Connecticut purposes is… a great deal different for some taxpayers than their filing status for federal purposes. For most taxpayers, you file the same as you would for federal purposes (single, married filing jointly for federal and Connecticut, married filing separate for federal and Connecticut, or head of household, qualifying widow(er) with dependent). But there’s an additional category for some taxpayers: married filing jointly in Connecticut only.

The latter status (married filing jointly in Connecticut only) is a nod to individuals who are parties to a civil union recognized under Connecticut law. Same sex marriages and civil unions are recognized in Connecticut but not for federal purposes.

Pension and annuity benefits received by Connecticut residents are subject to Connecticut income tax to the extent that these benefits are includable for federal income tax purposes. This applies even if the pension is paid by an out of state employer.

Since military is huge in Connecticut (I should know, as my brother is stationed there), there are special rules for military personnel. Here’s the most important rule: if you weren’t domiciled in Connecticut before you entered the military and you were later assigned to active duty in Connecticut, you do not become a Connecticut resident just because you live there now. If your home of record is in another state, you are a nonresident and your military pay is not subject to Connecticut income tax.

Connecticut does participate in the Treasury Set Off program. A Connecticut state tax refund will be taken to satisfy any outstanding liabilities owed to Connecticut or to the Internal Revenue Service; a federal refund will be taken for same.

Like Colorado, Connecticut makes it easy to designate your refund to charity. For 2008, the check off options were:

• AIDS Research

• Organ Transplant
• Endangered Species/Wildlife
• Breast Cancer Research
• Safety Net Services
• Military Family Relief Fund

Sales Tax.

Connecticut levies a 6% state sales tax on the retail sale, lease, or rental of most goods. Food for consumption, medical goods and services and clothing under $50 – the usual suspects – are exempt. Some interesting exemptions include college textbooks, compact fluorescent lights and rare coins.

There are two additional exceptions:

1. The sales tax rate for the sale of computer and data processing services is 1%.

2. The sales tax rate is 4½% on the sale of a motor vehicle to a nonresident member, or a member and his or her spouse jointly, of the armed forces of the United States stationed on full-time active duty in Connecticut.

There are no separately collected local or municipal sales taxes.

Tobacco Tax

Connecticut’s cigarette tax is $2.00 per pack pack, which ties it for the 6th highest rate in the country. The national average now stands at $1.23.

Gas Tax

The gas tax rate in Connecticut is $.364 per gallon, making it the 3rd most expensive state in which to buy gas – just behind New York and California.

Property Taxes

Connecticut does impose taxes on real property based on the assessed value of the property. Property tax calculations are determined using 70% of the assessed value.

As you would expect so close to New York, Connecticut property tax collections are quite high. In 2006, Connecticut ranked second in property collections per capita and per household; only New Jersey is higher (also close to New York… Hmm….).

Inheritance and Estate Tax

As you might expect in a state with wealthy residents, Connecticut imposes an estate tax. The tax is on the transfer of estates valued at $2 million or more beginning at 5% of the first $100,000 and increasing to 16% for estates over $10 million.

Overall Tax Burden

The overall tax burden in Connecticut, taking into account taxes paid by individuals, results in a ranking as 3rd most-tax burdened state in the country, according to Tax Foundation. That sounds high but it’s an improvement over 1998 when it was ranked 1st.

taxgirl says

Connecticut is a bit eclectic. And I don’t just say that because they are represented by Democrat Republican? Independent Senator Joe Lieberman.

I say it more because of the incredible disparity in income in the state (much like another high tax state, New Jersey). The city of New Canaan has one of the highest per capita incomes in America with a per capita income of $85,459 while the capital, Hartford is one of the ten cities with the lowest per capita incomes in America ($13,428).

The individual income tax rate is actual relatively low and, in a state with such varied incomes, you would expect a two-tiered system.

The lion’s share of Connecticut’s tax burden comes in the form of extremely high property taxes per capita. I suspect the “per capita” bit is attributable to the high priced housing near the New York state line. Property taxes account for, on average, nearly 40% of the Connecticut taxpayer’s tax burden.

Gas taxes are also pricey. Not surprising since taxes in New York are so high. It may be a case of keeping up with the New York Joneses (not to be confused with Jones New York).

With respect to American Recovery and Reinvestment Act (Recovery Act) dollars, Connecticut is near the top of the pack in terms of funding allocations. The state is slated to receive more than $2.6 million from ARRA with the biggest chunk going to the Department of Education.

While the tax burden is heavy, it doesn’t seem to be driving folks away from the state. I suspect a healthy military and student population has contributed to the overall economy of Connecticut – as well as high dollar jobs in Manhattan.

–

(Note: tax rates were current as of 08-12-2009 and were taken from the CT Department of Revenue Services)Similar Posts:

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