It turns out that more states and localities are considering a soda tax to raise money fight obesity. For a laugh, check out The Onion’s coverage. Similar Posts:

• NY Closer to Soda Tax?
• Sweet, Sweet Taxes
• Don’t be too smug, Colorado: Philly can increase taxes with the best of them…
• Governor Paterson Not Sweet on Soda: Fat Tax Proposal
• “Fat Tax” On the Scene Again – This Time, In the Senate

Hot on the heels of the success of New Jersey’s tax amnesty program, Pennsylvania has decided to give it a whirl.

The amnesty program will kick off April 26 and run 54 days, ending on June 10, 2010. During that time, taxpayers have the opportunity to come clean and pay up. In return, all penalties and half the interest will be waived for businesses and people who pay up. This is a little bit different from Pennsylvania’s last stab at amnesty, fourteen years ago, when penalties were waived but interest was payable in full.

The program is bigger than individual income tax. It also includes: Agriculture Cooperative Tax; Bank and Trust Company Shares Tax; Capital Stock or Foreign Franchise Tax; Cigarette Tax; Corporate Net Income Tax; Electric Cooperative Tax; Employer Withholding Tax; Fuel Use Tax, except taxes, interest and penalties collected under the International Fuel Tax Agreement owed to other states or provinces are not eligible for the Amnesty Program; Gross Premiums Tax; Hotel Occupancy Tax, including Local Hotel Occupancy Tax for Philadelphia and Allegheny County; International Fuel Tax Agreement (IFTA); Inheritance and Estate Tax; Interstate Bus Compact Tax; Liquid Fuels Tax; Loans Tax; Marine Underwriting Profits Tax; Malt Beverage Tax; Motor Carriers Road Tax; Motor Vehicle Carriers Gross Receipts Tax; Mutual Thrift Institutions Tax; Oil Company Franchise Tax; Parimutuel Wagering and Admissions Tax; Personal Income Tax; Public Utility Realty Tax; Realty Transfer Tax; Sales and Use Tax, including Local Sales and Use Tax for Philadelphia and Allegheny County; Surplus Lines Tax; Unauthorized Insurance Tax; and Gross Receipts Tax.

Are you thinking what I’m thinking?? We have a boatload of taxes in Pennsylvania.

To force encourage compliance in the program, a 5% non-participation penalty will be imposed on all un-paid tax, penalty and interest not paid in full during the amnesty period. Those folks who are in appeals or under payment plans will be exempt from the “extra” penalty.

And getting your affairs sorted out isn’t a done deal after this year: taxpayers who become delinquent again within a couple of years will likely have to repay the previously forgiven penalty and interest. It’s the Commonwealth’s way of reminding you to stay compliant.

For what I’m sure are obvious reasons, you can’t participate if you’ve been charged with a tax crime or named as a defendant in a criminal tax investigation. And if you opt in this time, you’re barred from future amnesty plans.

(If you’re dying to read all of the additional details, you can read the text of the statute here.)

Although there was initial opposition to the program when it was first contemplated, a huge hole in the budget helped smooth things over. The program is expected to raise an additional $190 million. A nice chunk of change, though nowhere near the $745 million that NJ raked in.

As you may know from the blog, I’m a big fan of regulated and thoughtful amnesty programs. In some cases, penalties may sometimes be more than the actual tax due in the first place – not even counting interest. Many taxpayers get overwhelmed and even though they may want to set things right, they just don’t know where to start. Amnesty programs can be an easy, non-threatening way to start fresh. A limited, monitored and infrequent amnesty program means that taxpayers pay what they owe (remember, taxpayers still have to pay their taxes) and the taxman gets his money so that we don’t have to raise taxes to make up shortfalls in the budget. It’s a win-win.

I understand the argument against it, though I don’t buy it. I don’t think it actually encourages people to cheat. Trust me, I’ve met a lot of unabashed tax cheats in my line of work – and the people who want to game the system are going to, one way or the other. But the vast majority of people who get into tax trouble and walk through my door don’t want to cheat. They want to make it right and move on. That’s where amnesty works.

Why make it hard to do the right thing? I think Pennsylvania made a smart move here – and I hope it pays off.Similar Posts:

• NJ Offers Tax Amnesty Program
• CT and MD Offer Tax Amnesty
• Philadelphia Amnesty Program
• Message from NJ: Amnesty Works
• States Find It May Not (*gasp*) Be Necessary to Raise Taxes

DOH! This version has been corrected. My original source indicated that the proposal was targeted to the city (like Philly) and not the state. Apologies for the error.

Just days after Philadelphia Mayor Michael Nutter announced plans for Philadelphia to tax soda, New York’s Mayor Michael Bloomberg signaled that his city supports state efforts to do the same.

(Sheesh, New York. First we win a World Series, then you win a World Series. We tax soda, you tax soda. What’s next?)

In his speech on Sunday, Bloomberg went through the blah-blah-blah of how the tax would help reduce obesity rates and accompanying medical costs before cutting to the chase: it’s going to make some money. It’s anticipated that it will raise about $1 billion each year – and at just half the rates of the Philly tax. The proposal for New York would levy a penny-per-ounce tax on soda.

Bloomberg expects some resistance. In 2008, Governor Paterson suggested a similar tax for the state of New York. Despite tentative support from Bloomberg at the time, the measure failed. Even so, the state of New York is trying it again. Bloomberg is blazing forward with the soda tax, saying, “In these tough economic times, easy fixes to our problems are hard to come by. But the soda tax is a fix that just makes sense.”

To make it more palatable, this version of the tax would be directly imposed on soda producers rather than tacked on as a sales tax. Of course, it’s just semantics – we all know that corporations will just pass the tax along to consumers.

With all of the emphasis on taxing soda, the industry is clearly concerned. The American Beverage Association has already spoken out against Philadelphia’s proposed tax – and against New York state’s version of the tax. I’m sure they’re sharpening their pencils for a new release as I type this…Similar Posts:

• Cheaper Clothes in New York City?
• Looking to increase your sales tax burden? Move to Chicago!
• Philadelphia Struggles With Revenue Woes
• Don’t be too smug, Colorado: Philly can increase taxes with the best of them…
• Philadelphia Closes Its Doors

Just a week after I reported that Colorado was moving to increase taxes on its sugary drinks, Philadelphia Mayor Nutter is expected to announced a new tax on sugary drinks.

Nutter plans to present his 2010-2011 budget on tomorrow. Expected to be included is a 2 cents per ounce tax on sugary drinks. That’s right: 2 cents per ounce.

Let me run those numbers for you:

Can of soda: 24 cent tax increase.
Individual bottle of soda: 32 cent tax increase.
Six pack of soda: $1.44 tax increase.
2 liter bottle of soda: $1.28 tax increase.

Yowza.

But Nutter’s plan doesn’t stop there. It also includes a residential trash fee of $300 per year. No word yet on how businesses (and rental properties) would be affected.

It’s estimated that the soda tax and the trash fee would raise enough revenue to eliminate the City’s deficit. But at what cost?

Don’t get me wrong. I’m actually not opposed to the idea of increased taxes in the City. I realize that we have a budget problem like many cities and towns these days. And I want the City to continue to pick up my trash, plow my streets and keep my libraries open. I just wish we could do those things differently – like roll the cost into real estate taxes. Those would be more equitable than a flat residential fee and would be more efficient to administer. Even better for taxpayers? They’d be deductible, unlike the proposed trash fee.

But this trash fee as proposed? Nightmarish. I can feel it.

A lot of the details are still be worked out. I’ll let you know how things sit once we hear the official announcement.

In the meantime, don’t get too settled in your own city and/or state. My guess is that higher taxes and fees are coming to you, too.Similar Posts:

• Philadelphia Struggles With Revenue Woes
• NY Closer to Soda Tax?
• Philadelphia Closes Its Doors
• Looking to increase your sales tax burden? Move to Chicago!
• Phillies v. Van Gogh: Culture Goes to War in Philadelphia

Colorado Governor Bill Ritter (D) made headlines all over the country this week when signed a bill adding sales tax to candy and soda. The bill was one of nine bills meant to address the state’s $1.5 billion budget shortfall.

The bill, as in other states like Pennsylvania, is being touted as an elimination of an existing exemption (the official name is HB 1191, Eliminate Candy and Soda Sales Tax Exemption) rather than a sales tax increase. Simply semantics, Colorado. Your taxes are going up.

Ritter was quick to offer that there were not many alternatives, saying, “Signing these bills was not something I wanted to do, but it was something that was necessary in order to keep the budget balanced and to continue positioning Colorado for a strong and healthy recovery.”

Republicans, however, signaled their opposition, claiming that additional taxes would only worsen the recession.

So, same as almost everywhere else, no?

What is notable about Colorado is that it is opting to tax the very items that many other states (and indeed, the federal government) have toyed with taxing – or simply taxing more – in an effort to raise revenue keep us healthy. But Colorado didn’t sugar coat it (ok, bad pun). They stuck it in the budget as an income generator, not disguised as some kind of tax policy initiative. It’s not a “fat tax” – it’s a sales tax. Hmm. Interesting concept.

Colorado’s success in getting the measure through – despite noise from the gallery – may inspire other states to take up similar measures. Stay tuned.Similar Posts:

• More on Health Care Reform: Congress Apparently Sweet on Soda Tax
• “Fat Tax” On the Scene Again – This Time, In the Senate
• Election Results: State Tax Legislation
• “The Onion” Coverage of the Soda Tax
• Governor Paterson Not Sweet on Soda: Fat Tax Proposal

To start the second half of the Super Bowl, with the Colts comfortably ahead of the Saints, Coach Sean Payton called for an onside kick. For those of you who don’t follow football, let me tell you: it’s a remarkably gutsy move. It’s a way to get the ball back early, provided that things go the way that you hope they do. If they don’t, you lose the ball and the opposing team has an advantage. It worked for the Saints. Not only did they get the ball back, the entire momentum of the game shifted in their favor.

Pennsylvania Governor Edward Rendell is about to launch his own version of the onside kick: a gutsy move to raise $2.3 billion in two years by changing the way that Pennsylvanians are taxed. If he’s successful, the Commonwealth may manage to avoid the “financial tsunami” expected by the loss of current revenue. If he’s not, chances are that the nation’s 6th most populous state will sink even further into debt.

Here’s what Rendell is suggesting: cut the sales tax rate to 4% from the current rate of 6%. That’s meant to make taxpayers feel like they’re getting a break… Only he’ll make up the difference by expanding the sales tax base adding items like coal, candy and professional services such as legal services, accounting and engineering. As a member of the bar in Pennsylvania, let me tell you, it’s not a popular idea.

Since the Commonwealth is experiencing a boon in the natural gas industry, Rendell is also suggesting a levy on natural-gas drilling. The new tax on natural gas would be 5% of value plus 4.7 cents per 1,000 cubic feet produced. Republicans in the Senate have signaled that they will oppose the tax.

Not surprisingly, Rendell also wants to close a corporate tax loophole which relies on the creation of Delaware subsidiaries to avoid taxation in Pennsylvania. Inside Pennsylvania, he proposes shaving the corporate net income tax rate from 9.99% to 8.9%. Clearly, the move is meant to make it more appealing to do business inside the Commonwealth and less advantageous to move your business out.

As budget shortfalls continue to pile up in states across the country, expect more governors to consider “alternative” taxation. As for Rendell, who considers himself quite the football aficionado? He’ll probably find himself playing defense in the days and weeks to come.

Similar Posts:

• PA Tax Hike Higher Than Expected
• Sales Tax Takes a Holiday
• How Much is that 75p Soda? Sales Tax Revisited.
• Fix the Tax Code Friday: Exempting “Real” Food from Tax
• Massachusetts takes a holiday.

Beer drinkers in the Mountain State are struggling to raise revenue in a bad economy. Some members of the state’s legislature think they have a solution: tax beer.

West Virginia House Health and Human Resources Committee Chairman Don Perdue, who sponsored the bill, says that an increase in the tax is necessary. His plan to earmark funds raised by the tax for substance abuse programs.

West Virginia beer drinkers wonder why that should be their responsibility. After all, many note, every beer drinker is not destined to abuse it – so why should the full burden of protecting those who do fall on them? It’s a bit like jacking up gym membership fees for everyone to account for those who are overweight.

And it’s not a small increase. The beer tax sits at $5.50 per barrel today. The House plans to increase the tax to $19.25, an increase of about 250%. Perdue says that the increase would raise $20 million.

Supporters of the measure say that the cost is merely pennies per drink and won’t affect most moderate and social drinkers. Still, at a public hearing, Ralph Winter, representing the Teamsters Union, said, “Beer, in my opinion, is the middle-class beverage. As we all know, in this current recession we’ve been through and are still in, there’s nothing worse than another tax on a middle-class worker.”

The directed nature of the tax seems to be what is driving most of the opposition. But Wayne Coombs, director of the West Virginia Prevention Resource Center, says that the “hidden tax” of substance abuse affects everyone. His Center estimates that the state spends $450 million annually in costs for health care and prisons directly related to substance abuse. Using those numbers, the tax would look to be a bargain.

But is it fair to shift the costs of substance abuse programs onto the shoulders of those who may drink responsibly? What do you think?

(* Extra points if you can identify the inspiration for my title today.)Similar Posts:

• New Health Care Reform Ad Airs
• Hey Congress, Why Don’t You…? Tax Bad Behaviors
• Fund children’s insurance on the backs of smokers?
• Alabama Imposes “Fat Tax”
• Ask the taxgirl: Tax dollars for illegal immigrant health care?

Update: We have a winner! It’s Emily! For the answer, see the comments!

Our next tax trivia question for the giveaway is:

A few years ago, the tax laws in a certain country were changed to benefit wealthy foreigners. The law became known as Beckham’s Law, or Beckham’s Tax, because footballer David Beckham was one of the first to take advantage of it – some speculate that it was actually written for him. Name the country.

The first correct answer wins free CCH tax prep software.

I’ll be out of the office today teaching a CLE on taxes and I’ll have limited access to email – if you’re a winner, you likely won’t know until late afternoon, so keep guessing. If you’ve submitted an answer and you don’t see it, it’s likely in the queue. Don’t assume that the last question has been answered correctly – I’m pre-posting trivia today, so be sure to make guesses on both.

Remember that you have to comment on the actual post, not on email, Twitter or Facebook, in order to win (though feel free to comment that way for fun). You can read the rules for the giveaway and more about the prizes here.

What’s your guess?

Similar Posts:

• Tax Trivia: Misused Social Security Number
• Tax Trivia: Al Capone
• Football mania
• Life is a Bowl of Football
• Does Pennsylvania Care More About Football or Taxes?

Philadelphia is having a tough time these days, much like many other cities. Expenditures are up and revenues are down. What’s a city to do?

One thing that the city is doing is pursuing collections matters very aggressively. I’ve probably gotten more city tax related phone calls at my office in the last month than in the entirety of my career. And I don’t mean that in a good way. They are mostly low-dollar matters, with penalty and interest generally exceeding the amount of tax due.

You’d think they’d do better to try and collect from the bigger fish. According to the City’s own web site, “business tax delinquents owe the City more than $53.3 million in outstanding judgments.” The top ten on the list each owe more than $1 million. You can see the list here (downloads as a pdf).

To deal with the number of tax delinquents, the city is considering an amnesty program, the first for the city in 20 years. The program was unanimously recommended by the City Council’s Finance Committee last week.

The amnesty program would forgive all penalties and half of the interest on unpaid tax bills. I haven’t seen the details yet but generally, amnesty programs only apply to matters which have not already been subject to judgment (meaning the business tax delinquents on that list would not get a pass). The current administration believes that it will net between $25 million and $30 million with the program.

Community Legal Services would like to see the final amnesty bill include unpaid water bills. That provision has not yet been included; one would hope that if such a provision were included, it would be limited to low-income residents. There’s no point in giving many of the existing slumlords in Philadelphia a free pass; it’s bad enough that many don’t pay their taxes.

I am generally a fan of amnesty programs because the statistics show that they tend to work. Whether you believe that folks act in good faith with respect to these programs is a different matter altogether – but they do tend to pay up, something that wasn’t happening before. For many, it’s a fresh start.

But amnesty without reform, especially in a city like Philadelphia, can be meaningless. Hopefully, we’ll see a step forward there, too.Similar Posts:

• Philadelphia tax “amnesty” to end soon
• NJ Offers Tax Amnesty Program
• Pennsylvania Plans Tax Amnesty Program
• Philadelphia Closes Its Doors
• Philadelphia Struggles With Revenue Woes

It’s nearly time to go shopping! On Friday, retailers will offer bargains on all kinds of holiday gifts just in time for the season.

South Carolina is going one better: a sales tax holiday on Black Friday. For guns. And here I was planning on a plain ol’ Stig on a Rope.

Yes, the Revenue Department of the state of South Carolina has issued reminders for its upcoming “Second Amendment Weekend.” The two day extravaganza begins on 12:01 a.m. on Black Friday. It is the only two day sales tax free holiday over Black Friday in the country.

The sales tax holiday means that shoppers will pay no state or local sales taxes on handguns, rifles and shotguns. Alas, when it comes to stocking stuffers, taxes still apply to ammunition and accessories. Likewise, toy handguns, toy rifles and toy shotguns are specifically not included (they’re on the excluded list – I’m totally not making that up).

And collectors need not stand in line. The holiday doesn’t apply to “handguns generally recognized or classified as antique, curiosity, or collector’s items.”

You can read the entire list of what’s included – and what’s not – here (downloads as a pdf).

The National Rifle Association, of course, feels like Christmas has come early. “It allows gun owners in tough economic times to stock up on the hunting season and holiday season,” said NRA spokeswoman Alexa Fritts.

No other items are exempt during the sales tax holiday.Similar Posts:

• School Days, School Days, Spend A Lot of Money Days: School Sales Tax Holidays on the Way
• Hurricane Season Starts Soon, As Do Sales Tax Holidays
• School’s Out for Summer
• Sales Tax Takes a Holiday
• How Much is that 75p Soda? Sales Tax Revisited.