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Tues late: Taxing
posted at 2009-06-10 01:41 | Last modified 2009-06-10 18:12
It’s been a long, long day chasing H1588 around.
The tax package, euphemistically titled “Reduce Budget Cuts,” passed Finance on a 16-13 vote tonight. All told, House Finance committee whacked about $159M from H1588’s bottom line, leaving it at $784M. That's about 17% smaller than the initial proposal of $937.6M.
What changed:
Cigarette tax: The proposed tax hike of 25 cents/pack was pulled out of the bill on an amendment by Lenoir Dem Van Braxton, with the support of more than half of the other Dems present. It was a 22-7 vote.
The tax was projected to bring in about $122.6M next fiscal year, which adds up to about one-eighth the total value of the original tax package. Tobacco foes were not happy, but haven’t given up on trying to reinsert some level of tobacco tax before it’s all over. (Hello, conference committee.)
Beer: The original proposal would have increased the beer tax by 1.5 cents a can, which would be 36 cents on a case. Orange Dem Bill Faison ran the amendment to kill it tonight, arguing that the budget only *really* needs $722.6m (see below) to offset the worst cuts, so the House could afford to leave beer out of it. The committee agreed, 19-9.
The beer tax was expected to bring in $25.6M next year, a smallish piece of the package, though Wake Dem Deborah Ross took issue with Faison’s assertion that the state doesn’t need that money.
Wine: The last Finance amendment of the night removed the wine tax hike, originally proposed at 7.5 cents a bottle. Speaker pro tem William Wainwright (D-Craven) ran the amendment, arguing the tax shouldn’t be raised because “You have a lot of people that utilize wine for health reasons.” This drew gales of laughter from the committee, which was pretty punchy by that point, but they still approved the amendment 17-11.
The wine tax’s value was projected at $5.9M next year. It should be noted that, since no one was moved to argue the medicinal value of liquor, it’s still in line for a excise tax hike of 1.5%
What didn’t change:
Sales tax: Still up a quarter cent, and still expanding to cover repairs (auto, maintenance, etc.) and warranties, plus digital downloads of music, books, and movies, movie and concert tickets, and courier services (e.g. Fed Ex).
Income tax: Still rising half a percent on $200K to $500K, and three-quarter percent on over $500K. (It is marginal, BTW)
The franchise tax would be expanded to include LLCs.
Combined reporting would be required for multistate corporations, closing the "Walmart loophole" that allows corporations to shift assets between susidiary entities to reduce tax laibility.
A couple other corporate loopholes would close, too. Binker has the bill explanation online.
**Updated: The tax bracket thresholds have been corrected. Thanks to Mitch Kokai at JLF for catching the error!
Follow the money
The bill, which isn’t updated yet online as of tonight, sets out what House budget writers want to do with the money the revenue package will bring in.
For next fiscal year (09-10):
- $352 million to Education
- $288 to Health & Human Services
- $72.7 million to Justice & Public Safety
- $9.7 million for “Other Needs” (Housing and libraries, Econ Dev non profits, operating reserves for state agencies, etc.)
- $215 million to Reserves
Total: $937.4M
Total less reserves: $722.4M (Bill Faison's number, above)
Whether they target Reserves or not, budget chairs will need to remove $159M somewhere. More on that (lots more, I’m sure) to come Wednesday and beyond.
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