Holes, Holidays, Hurricanes, and Tax Bills
The Illinois legislature passed a budget with revenue holes and no spending cuts. Democratic Governor Pat Quinn tried to make temporary tax increases—set to partially expire on January 1—permanent, but he couldn’t get the votes. And Illinois House Democrats wouldn’t cut spending and instead kept it flat. The second half of 2015 will see a revenue decline, when the personal income tax rate drops from 5 percent to 3.75 percent, and the corporate rate falls from 7 percent to 5.25 percent. This will add $2 billion to Illinois $4.17 billion deficit.
And Republican Governor Chris Christie won’t raise taxes, either. New Jersey has a two-year revenue hole estimated at $2.7 billion, but Christie rejects the notion of a “millionaire’s tax,” proposed by the state’s Democrats: “The top 10 income taxpayers pay more than the bottom two million filers… if those 10 people get up and walk out… and go hang with [Governor] Rick Scott in Florida, I’m losing the equivalent in revenue to what the bottom two million filers pay.” It’s not clear that the loss would be so abrupt.
On Florida holidays and hurricanes… Hurricane season began yesterday, and millionaires or not, Floridians can purchase hurricane supplies sales-tax free until June 8. Eligible items include ice packs, flashlights, portable radios, portable generators, Tiki torches, and certain batteries (AAs are tax-free, AAAs are not). Sales tax holidays grew more popular as states carried budget surpluses: They were seen as a way to provide tax relief. But do sales tax holidays help the average consumer or boost a state’s economy? The Institute on Taxation and Economic Policy weighs in: The short answer is “no.”
And assuming hurricanes don’t hit Miami… Property values in Florida’s Miami-Dade County are recovering, especially in the urban center and on the waterfront. The property tax base expanded 6.5 percent from last year, the biggest gain in three years after four years of steep declines, according to new estimates from the county’s property appraiser. More than a million properties in the county have taxable value totaling nearly $210 billion. As for county revenue gain, The Miami Herald reports that “a quick stab at the fresh numbers suggests a gain of around $20 million.”
Selling a basketball team could mean getting hit with a huge tax bill. When you sell an NBA team for $2 billion, you could end up paying federal and state income taxes to the tune of $662 million. Then there’s the federal estate tax that will eventually be due: about $531 million. The wealthy certainly pay a significant amount in taxes—though if there’s any felt sympathy, it might wane when the wealthy person is Donald Sterling.
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