• State Corporate Income Tax Rates and Brackets for 2018: With the new year, we would like to point you towards a tax map that was recently published by the tax foundation. This is a great resource to show how your state measures up regarding its corporate tax rate, along with any other changes that may be in affect this year. Please see the key highlights below and a link to the Tax Foundation’s tax map here: http://bit.ly/2GbGTx5.
- Forty-four states levy a corporate income tax. Rates range from 3 percent in North Carolina to 12 percent in Iowa.
- Six states — Alaska, Illinois, Iowa, Minnesota, New Jersey, and Pennsylvania, and the District of Columbia — levy top marginal corporate income tax rates of 9 percent or higher.
- Seven states — Arizona, Colorado, Mississippi, North Carolina, North Dakota, South Carolina, and Utah — have top rates at or below 5 percent.
- Nevada, Ohio, Texas, and Washington impose gross receipts taxes instead of corporate income taxes. Gross receipts taxes are generally thought to be more economically harmful than corporate income taxes.
• South Dakota and Wyoming are the only states that do not levy a corporate income or gross receipts tax.
• New federal treatment of foreign business income, expensing, accounting for losses, and partnerships, as well as the way in which states couple with the Internal Revenue Code:
• States base their tax codes in some measure on the I.R.C. for the sake of administrative and compliance ease. States, however, conform to the code in varying ways. The 2017 federal tax act (Pub. L. No. 115-97), which includes many business income tax changes, will provoke very different responses from states.
• Responses are already underway. New York lawmakers will consider coupling to the federal code (S. 6974), creating a credit equal to any increase in individual tax liability resulting from the federal changes (S. 6951), and possibly replacing some income taxes for wage earners with a payroll tax on employers.
• California lawmakers have introduced a bill (S.B. 227) that would allow charitable-contributions as a workaround of the new cap on the federal deduction for taxes paid to state and local governments.
• Maryland and Illinois (H.B. 4237) lawmakers are considering a similar bill. In addition, Maryland could adopt a personal income tax exemption, and Illinois a “privilege tax” on partnerships and other pass-through entities conducting investment-management services.
• Nebraska (L.B. 1090) and West Virginia (H.B. 4146) also could continue allowing taxpayers to claim personal exemptions. In Pennsylvania, lawmakers may rescind a state revenue department bulletin that required companies to add back any benefits incurred by full expensing of capital purchases (H.B. 2017).
• Georgia: Local FOX affiliate reports, “Georgia's governor talk about state tax overhaul” ATLANTA - Governor Nathan Deal said he is willing to work with lawmakers to reduce state taxes. Among the proposed changes, conforming the state tax code to federal regulations. The announcement came after reports Georgians could pay around $2.6 billion more in taxes over the next five years. That potential bump in state taxes is a result of the recent federal tax cut that limited or eliminated some deductions Georgians have used in the past.
• South Carolina: The State reports, “New tax law will cost South Carolinians millions in higher state taxes” South Carolinians will pay $1.6 billion less in federal income taxes under the tax reform law that Congress passed last year. But they could pay almost $200 million more in state income taxes, according to a state agency. “If South Carolina does nothing (on tax reform this year), it’s almost certain there would be a (state) tax hike because there will no longer be personal exemptions,” said Richard Auxier of the Tax Policy Center, a nonpartisan Washington, D.C., think tank. Before Christmas, President Donald Trump signed into law changes to the federal tax code, including repealing the personal exemption. Those changes impact many states including South Carolina, which tie their state taxes to federal tax law. As a result, if the S.C. Legislature doesn’t conform the state’s tax to reflect the changes in the federal tax code, South Carolinians could pay more state income taxes in 2019. Without changes, South Carolinians could pay $180 million more in state taxes next year – about $75 per person, according to new analysis done by the S.C. Revenue and Fiscal Affairs Office.
• Pennsylvania: The AP reports, “Gov. Tom Wolf renews battles on natural gas, minimum wage in budget” Democratic Gov. Tom Wolf's election-year budget plan unveiled Tuesday will renew battles with the Republican-controlled Legislature over imposing a tax on Marcellus Shale natural gas and increasing the minimum wage. Wolf's budget plan, his fourth and final first-term proposal, would boost spending by about $1 billion, or 3 percent, to $33 billion for the fiscal year beginning July 1. The higher spending would go toward public schools, skills training, pension obligations, prison costs and social services for children, the elderly and disabled. In a prepared copy of his speech to a joint session of the state House and Senate in the Capitol, Wolf reels off a list of his perceived accomplishments in office. But he also gives a nod to his battles with the Legislature's huge Republican majorities, which have rejected billions of dollars in tax increases sought by Wolf and forced him to adopt more austerity in budget-making. Wolf will not seek an increase in sales or income taxes, but the new budget plan would rely on about $250 million from a new Marcellus Shale tax — Wolf's fourth straight attempt to impose one — and $100 million in savings on human services programs. Administration officials say the savings would come from reduced demand for the services because of an increase in the minimum wage to $12 an hour, up from the federal minimum of $7.25.
• Connecticut: The AP reports, “Connecticut Democrats plan to push for higher minimum wage” HARTFORD — Democrats in the Connecticut General Assembly are pledging to increase the state’s minimum wage. House and Senate leaders on Tuesday said they’ll push for a “livable wage” during the new legislative session, which opens Wednesday. Connecticut’s minimum wage is currently $10.10 an hour. Democratic Senate President Martin Looney suggests the wage could climb to $11 an hour, beginning January 2019. It would then increase to $15 by 2023. He says lawmakers could then link the wage to an index, ensuring it would automatically increase without the General Assembly having to pass legislation every few years. The minimum wage idea appears on the Democrats’ so-called “values agenda,” which also includes paid family medical leave. Senate Republican Leader Len Fasano says some of the Democrats’ proposals are “nothing more than political rhetoric.”
• Maryland: The Baltimore Sun reports, “Baltimore council members calls for Maryland to pass $15 minimum wage” The Baltimore City Council on Monday formally called on General Assembly lawmakers to pass a bill mandating a $15 minimum wage in Maryland. The move by the council comes in support of bills filed by state Sen. Richard Madaleno of Montgomery County and state Del. Shelly Hettleman of Baltimore County. Their companion bills would raise the state’s minimum wage from a little more than $10 to $15 by 2023. The City Council tried unsuccessfully last year to raise Baltimore’s minimum wage, but the measure was vetoed by Mayor Catherine Pugh, who argued the city would be at a competitive disadvantage if other counties didn’t also raise their minimum wages. Pugh joined the council members Monday in calling for the state to take action. “Now more than ever there is justification for a statewide $15 minimum wage,” said City Councilwoman Mary Pat Clarke. “We’re all planning to go to Annapolis and maybe stay there until we get what we need for our people.”
PAID FAMILY LEAVE
• California: The Sacramento Bee reports, “California men are jumping at the chance to take paid family leave” When Facebook CEO Mark Zuckerberg took time off to care for his newborn daughter in 2015 – and again after the birth of his second daughter in 2017 – he became part of a wave of California men using paid family leave. About 85,000 California men took paid family leave in California during the 2017 fiscal year, double the number that took paternity leave in 2009, according to the latest figures from the California Employment Development Department. The number of women taking paid maternity leave during that period increased by a modest 6 percent. Under a long-standing California program, women can take up to 12 weeks of disability payments following a birth. After 2004, women and men could also take up to six weeks of paid family leave. The state pays for the benefits using worker State Disability Insurance (SDI) contributions. Workers can also pay into a voluntary plan; employers don’t pay. California is one of only a handful of states offering paid family leave for men and women. Most states instead offer unpaid leave. Money from paid family leave can alleviate the pressure on men to continue working after a child is born to keep income flowing. A decade ago, less than 25 percent of California family leave claims were filed by men; last year, that figure rose to nearly 40 percent. Fathers sometimes take leave at the same time as the moms, but increasingly they take leave after mothers go back to work to extend the amount of time a newborn is home with a parent.
• Ohio: Local Cleveland FOX affiliate reports, “Ohio lawmakers propose paid family leave bill” Three Ohio lawmakers have announced that they will introduce legislation to establish the Ohio Family and Medical Leave Insurance Program. State Reps. Janine Boyd (D-Cleveland Heights) and Kristin Boggs (D-Columbus) announced the proposed legislation Wednesday. In the Ohio senate, state Senator Charleta B. Tavares (D-Columbus) is the sponsor of the bill. It is expected to be introduced later this month or early next month. The proposed legislation would allow workers to continue earning a percentage of their paycheck while they take time off to care for a newborn, a newly adopted or new foster child, a family member with a serious illness or to address a medical condition of their own. Workers would be provided up to 12 weeks of family and medical leave during a 12-month period at partial pay. To be eligible, employees must have worked at least 680 hours and contributed to premiums to the Family and Medical Leave Insurance Fund for at least one year. Funding for the program is provided entirely by the employee through premiums deducted from their wages. Businesses would bear no financial costs, but they may decide to do so if they wish. Right now, the federal Family Medical Leave program grants an unpaid leave of absence in similar circumstances.
FOOD & BEVERAGE
• Indiana: Indiana Public Media reports, “Monroe County Food And Beverage Tax Starts Today” If you go out to eat or grab drinks in Monroe County, you’ll have to pay a 1 percent food and beverage tax starting Thursday. The tax means people in Monroe County will pay one cent for every dollar spent on food or drinks. County Commissioners approved the food and beverage tax in December, following hours of public comment and discussion. It will fund a more than 35 million dollar expansion of the county’s convention center, which the county says will lead to additional economic development and job growth. But others worry the tax could make food insecurity worse in the community, and that it will disproportionately affect Indiana University students.
• Indiana: Tribstar reports, “Food and beverage tax bill gets hearing - Measure would help finance Terre Haute convention center” A bill to allow Vigo County to impose a food and beverage tax of up to 1 percent is scheduled for a hearing this week in an Indiana Senate committee. The measure, Senate Bill 35, sponsored by Sen. Jon Ford, R-Terre Haute, is the first item on the Senate Public Policy Committee's agenda for a meeting at 9 a.m. Tuesday in Room 431 of the Indiana Capitol Building. The bill is designed to provide financing for a proposed convention center in Terre Haute. Ford deferred comment on the bill until Tuesday's hearing. Judy Anderson, president of the Vigo County Board of Commissioners, said commissioners plan to testify in support of the measure. “We are very supportive of Senator Ford and his willingness to carry a bill that is so important to Vigo County for our future and for the [Capital Improvement Board],” Anderson said. She said a convention center “is sorely needed” to attract visitors to Terre Haute. Commissioner Jon Marvel, president of the Capital Improvement Board, said the legislation is especially important now that Indiana State University has decided to proceed on its own with renovation of Hulman Center without including a convention facility.
• Louisiana: Local ABC affiliate KTBS reports, “Changes coming to Louisiana gaming?” It's been over 20 years since there's been any major changes, in terms of the law, for riverboat casinos in the state of Louisiana. 2018 could be the year we see some movement towards modernization and away from the water. When Louisiana voters finally gave the green light to gambling, it was with the stipulation it be done from paddlewheel style boats that could navigate designated waterways. The boats -- in Northwest Louisiana at least -- never moved so that requirement was dropped. That's been the only change since 1991. The boats have aged while the industry has advanced. Is it time to dry dock the boats and move onto land? The first proposals are somewhat modest, but again they could be impactful in terms of allowing us to become more like other states that have brought gaming on land and have different kinds of limitations on gaming space," said Barry Regula, senior vice president and general manager of Margaritaville Resort Casino. Regula is referring to recent recommendations from the Riverboat Gaming Task Force. Led by Louisiana Gaming Control Board Chairman Ronnie Jones, the group has been meeting, listening and discussing the possibilities for about 17 months. The recommendations will go before state lawmakers next month.
• Connecticut: The CT Mirror reports, “Interior Department seeks dismissal of CT gaming lawsuit” The U.S. Interior Department told a federal court Monday that Connecticut’s refusal to negotiate a gaming compact with the Mashantucket Pequots nearly 30 years ago creates a fatal flaw in the state’s legal efforts today to help the Pequot and Mohegan tribes compete with MGM Resorts International. Joined by Connecticut, the two tribes asked in a lawsuit filed in November that the U.S. District Court force Interior Secretary Ryan Zinke to approve amendments to their gaming agreements with the state, clearing the way for them to jointly develop a commercial casino in East Windsor to compete with an MGM facility under construction in Springfield. Zinke has refused to approve or reject the amendments, and the tribes contend that they are deemed approved under the Indian Gaming Regulatory Act if the secretary does not reject them within 45 days of their submittal to the Interior Department.
BPAA is pleased to provide the following biweekly update on state policy. Please contact Tom Schreibel at email@example.com if you have any questions or updates on activity in your state.
Visit BPAA’s website at http://bpaa.com/bpaa/government-affairs/government-affairs to read previous federal and state policy updates.