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BPAA State Policy Update - December 4

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TAXES

New York: Bloomberg Law reports, N.Y. Bill Would Offset Elimination of State, Local Tax Deduction. New Yorkers would be held harmless from the potential elimination of the state and local tax deduction and any federal tax increase under a bill introduced in the state Senate. The bill (S. 6951), introduced Nov. 22, would create a new state tax credit to offset any increase in federal tax liability resulting from the tax reform measures being debated in Congress. The New York measure comes as state officials and those from other high-tax states like New Jersey urge their federal representatives to oppose elimination of the federal deduction for taxes paid to state and local governments (SALT deduction). Currently, the federal code allows people to deduct the cost of sales, income, and property taxes paid to state and local governments. The New York bill is expected to be one of a number of measures considered by the state Legislature in 2018 to mitigate the impact of any changes at the federal level. Under the House bill (H.R. 1), individuals could claim the deduction for property taxes up to $10,000 a year. However, the SALT deduction would be repealed temporarily under the Senate's reform bill. Nearly all of the individual tax provisions in the Senate bill would expire at the end of 2025, leaving to future lawmakers the decision to extend the higher standard deduction and lower tax brackets. Individual tax breaks, such as the personal exemption and SALT deduction, would be available in eight years, but tax-increasing provisions, such as the alternative minimum tax and the $5.49 million individual exclusion for the estate tax, also would return. Elimination of deductions is a way for the federal government to broaden the base of what is subject to tax and raise revenue to pay for cuts in individual and corporate rates, features of both Senate and House plans. Democratic and Republican members from higher tax states have pressed to preserve the deduction in some form.

LABOR

Missouri: Minimum Wage Rate Set for 2018. The Missouri Department of Labor announces the state minimum wage rate for 2018 has been established, according to state law, at $7.85, effective January 1. All businesses are required to pay at minimum, the $7.85 hourly rate, except retail and service businesses whose annual gross sales are less than $500,000. Per state law, the minimum wage rate is calculated once a year and may increase or decrease based on the cost of living as measured by the previous year’s Consumer Price Index. Missouri law does not allow the state’s minimum wage rate to be lower than the federal minimum wage rate. Compensation for tipped employees must also total at least $7.85 per hour. Employers are required to pay tipped employees at least 50 percent of the minimum wage, or the amount necessary to bring the employee’s total compensation to a minimum of $7.85 per hour.

Maryland: Governor Larry Hogan Introduces Paid Leave Compromise Proposal. Governor Larry Hogan today announced a compromise proposal to provide paid leave benefits to Marylanders while fixing the most problematic elements of the deeply flawed bill passed by the Maryland General Assembly, and subsequently vetoed by the governor, during the past legislative session. The governor unveiled the administration’s Paid Leave Compromise Act of 2018, which will be filed as emergency legislation and be ready on the first day of the upcoming legislative session. In December of 2016, Governor Hogan became the first Republican governor in the nation to introduce a statewide measure to expand paid leave. The governor’s proposal would have required larger businesses to provide paid leave, incentivized small businesses to offer this benefit by providing tax incentives to help offset the costs, and had the potential to cover 100% of Maryland workers. The legislature failed to take any action on the governor’s proposal, and instead passed the confusing, unwieldy, and unfair House Bill 1 (HB1). Due to HB1’s disastrous impact on the state’s economy and troubling unintended consequences for Maryland workers, Governor Hogan vetoed the legislation in May.

Texas: local ABC affiliate reports, Austin, Residents will have a final chance to tell city leaders their thoughts on a proposal to require businesses to give workers paid sick leave. In early November, more than a dozen small businesses presented a letter of action to the Austin City Council saying workers are at risk of losing wages if they miss days because of an illness. Nearly 40 percent of Austin’s work force is not allowed to earn paid sick days by their employers. Some business owners worry the about the costs of offering sick pay, saying it will make it more expensive to run a business in Austin.

FOOD & BEVERAGE

In Oregon‘s Multnomah County, the soda tax campaign is on hold until November 2018 in hopes of more favorable voter turnout. Meanwhile in Illinois, the soda tax is being wound down and some initial opponents are experiencing repeal remorse. A Mississippi poll found 72 percent support for raising cigarette and alcohol taxes to help fill the state’s $70 million revenue gap.

Arizona: Bloomberg Law reports, Arizona leaders may have voter support for a new method of funding education in the state: taxing soda. A poll released last week by Phoenix-based OH Predictive Insights shows nearly 60 percent of likely voters surveyed supported the idea of a two-cent-per-ounce tax to directly fund education. The question is hypothetical. No such proposal is set for the 2018 ballot, but the results could spark a debate as education funding is on the forefront of the state's agenda. The potential support comes as a surprise, said Mike Noble, managing partner and chief pollster at OH Predictive Insights. The automated survey polled participants Nov. 9, surveying 600 likely voters in the 2018 election across the political spectrum. Its margin of error is plus or minus 4 percentage points, according to OH Predictive Insights. Its demographics skewed toward people 55 and older, the agency said. Nearly a third of respondents opposed the tax. About 9 percent had no opinion. But the idea had particular support from rural Arizonans, which is surprising considering they tend to live in more conservative counties, according to the polling agency. The poll comes as policymakers consider how to address a state sales tax for education that expires in 2021. Arizona business leaders started pushing earlier this year to extend and increase that tax, approved by voters under Prop. 301. The tax brings in about $600 million a year to pay teachers, among other uses. Local executives, including the former CEO of PetSmart Inc., pitched increasing that tax to 1.5 cents for voluntary full-day kindergarten, teacher raises, and other priorities outlined by Gov. Doug Ducey (R).

ALCOHOL

Increasing taxes on alcohol sales may not be the best way to reduce drunk driving fatalities, according to a new report from the Urban Institute and Brookings Institution's Tax Policy Center. An analysis of two substantial increases in alcohol excise taxes in Illinois found the hikes were ineffective in reducing fatal crashes involving alcohol, the Tax Policy Center said in the report released Nov. 27. “With respect to the first excise tax increase, imposed by Illinois in 1999, we find no evidence that it reduced the number of such crashes,” the group said. While there was a significant reduction in crashes in interior counties of Illinois in response to a 2009 tax increase, the reduction was short-lived and possibly due to the fact that individuals in those counties couldn't easily cross state lines to avoid the tax hike, the Tax Policy Center said. Studies of alcohol, cigarettes, and unhealthy food and drinks confirm that individuals will cross borders to evade these taxes, the group said. “Given these results, policymakers should seek other state-level policy options when trying to reduce fatal alcohol-related crashes,” the Tax Policy Center said.

Alaska: Bloomberg Law reports, The Alaska Alcoholic Beverage Control Board proposed amending Alaska Admin. Code tit. 3, Section 304.375(c), 304.375(d) and 304.375(e), concerning distillery licenses. The proposed changes include: 1) a requirement that alcohol be distilled onsite for the purpose of obtaining a license; 2) a new subsection that defines what a licensee, agent or employee may serve on the licensed premises; and 3) adding the definition of “distillery's product.” Taxpayers may send their comments on the proposal to the Alcohol & Marijuana Control Office at 550 West 7th Avenue, Suite 1600, Anchorage, Alaska 99501. The comments must be received not later than 4:30 p.m. on Dec. 29.

Colorado: Colorado Plans Changes to Alcoholic Beverages Licensing Rules. The Colorado Department of Revenue proposed adopting 1 Colo. Code Regs. Sections 203-2-47-100, 203-2-47-300, 203-2-47-303 et al., on alcoholic beverages licensing. The amendments: 1) implement recent legislative changes, 2) remove provisions on change in class of license, 3) update references, 4) remove the requirement to file Form DR 0441 for excise tax reporting purposes, and 5) modify license application provisions. A public hearing will be held on Dec. 19, 11 a.m., at 17301 W. Colfax Ave, Suite 135, Golden, Colorado 80401.

Minnesota: Bloomberg Law reports, The Minnesota Department of Revenue (DOR) updated the excise tax delinquencies report for liquor, wine, and beer sales. The DOR published the list of taxpayers who are ten or more days delinquent in paying their taxes, and to whom no wholesaler, manufacturer, or brewer can sell or deliver products. The report also includes a list of businesses that are no longer delinquent.

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