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State Tax Reform Could See Some Big Changes In 2015
Author: Scarinci Hollenbeck, LLC
Date: January 21, 2015
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Changes are-a commin’ when it comes to 2015 and its going to be big…especially for state tax reform.
This year could coincide with substantial state tax reform, as many separate jurisdictions are currently planning changes in this area, policy analyst Jared Meyer wrote in The Fiscal Times.
Widespread state tax reform
Lawmakers in Nebraska, Georgia and Arkansas are all working on reforming tax laws in their respective states in 2015, noted Meyer, who works at the Manhattan Institute for Policy Research.
Legislators are pushing for these changes after 14 separate states cut their taxes in 2014, according to an American Legislative Exchange Council report. Wisconsin, Arizona, Rhode Island, Florida, Oklahoma, Indiana, Ohio, Kansas, New York, Maryland, Nebraska, Michigan, Missouri and Minnesota brought about reform during the year.
Estate taxes
Last year, several states reduced the total estate taxes paid by their residents when they increased their exemption levels. Eliminating this burden can be particularly helpful, Meyer contended, as many households move to states that do not tax this transfer of wealth. If these individuals decide to relocate to another state, this will result in their new jurisdiction benefiting from the income tax revenue they produce.
The policy analyst cited the most recent figures available, which revealed that states that had an estate tax in 2013 suffered net outflows of adjusted gross income of $92.7 billion between 2000 and 2010. Rhode Island and New York both took steps to become more competitive last year when they reduced their estate tax burden.
Last year, New York Governor Andrew Cuomo approved the state budget for the 2014-2015 fiscal year, which immediately increased the Empire State’s estate tax exemption to $2 million from its previous level of $1 million. The change became effective April 1 of that year, and the legislation set forth a schedule whereby the exemption will increase over time until it matches the federal exemption by 2019.
Rhode Island implemented two separate measures surrounding its estate taxes, increasing its exemption to $1.5 million from $922,000 and changing up its policy so that only wealth above this limit is subject to tax.
Corporate income tax
Several states reduced their corporate income taxes in 2014, including New Mexico, North Carolina, New York and Rhode Island. The government officials of these jurisdictions implemented these new policies after businesses paid more than $53.3 in state and local corporate income taxes in fiscal year 2013, according to data provided by the Council on State Taxation.
Separate figures provided by the ALEC report supported the perception that by lowering these business taxes, government officials can help fuel more robust job growth. More specifically, the document revealed that while the eight states with the highest corporate income taxes experienced a cumulative job growth rate of 5.1 percent between 2003 to 2013, the eight states where companies paid the least in taxes saw their jobs expand at a rate of 12.1 percent.
Amid this progress, Meyer has asserted that reducing taxes has become an important consideration for many state governments. He predicted that as a result of this new attitude, government officials in these jurisdictions will continue to bring about a state tax reform.
How do you think your business and/or family will be affected be the state tax reform? Feel free to leave your comments below.
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State Tax Reform Could See Some Big Changes In 2015
Author: Scarinci Hollenbeck, LLC
Changes are-a commin’ when it comes to 2015 and its going to be big…especially for state tax reform.
This year could coincide with substantial state tax reform, as many separate jurisdictions are currently planning changes in this area, policy analyst Jared Meyer wrote in The Fiscal Times.
Widespread state tax reform
Lawmakers in Nebraska, Georgia and Arkansas are all working on reforming tax laws in their respective states in 2015, noted Meyer, who works at the Manhattan Institute for Policy Research.
Legislators are pushing for these changes after 14 separate states cut their taxes in 2014, according to an American Legislative Exchange Council report. Wisconsin, Arizona, Rhode Island, Florida, Oklahoma, Indiana, Ohio, Kansas, New York, Maryland, Nebraska, Michigan, Missouri and Minnesota brought about reform during the year.
Estate taxes
Last year, several states reduced the total estate taxes paid by their residents when they increased their exemption levels. Eliminating this burden can be particularly helpful, Meyer contended, as many households move to states that do not tax this transfer of wealth. If these individuals decide to relocate to another state, this will result in their new jurisdiction benefiting from the income tax revenue they produce.
The policy analyst cited the most recent figures available, which revealed that states that had an estate tax in 2013 suffered net outflows of adjusted gross income of $92.7 billion between 2000 and 2010. Rhode Island and New York both took steps to become more competitive last year when they reduced their estate tax burden.
Last year, New York Governor Andrew Cuomo approved the state budget for the 2014-2015 fiscal year, which immediately increased the Empire State’s estate tax exemption to $2 million from its previous level of $1 million. The change became effective April 1 of that year, and the legislation set forth a schedule whereby the exemption will increase over time until it matches the federal exemption by 2019.
Rhode Island implemented two separate measures surrounding its estate taxes, increasing its exemption to $1.5 million from $922,000 and changing up its policy so that only wealth above this limit is subject to tax.
Corporate income tax
Several states reduced their corporate income taxes in 2014, including New Mexico, North Carolina, New York and Rhode Island. The government officials of these jurisdictions implemented these new policies after businesses paid more than $53.3 in state and local corporate income taxes in fiscal year 2013, according to data provided by the Council on State Taxation.
Separate figures provided by the ALEC report supported the perception that by lowering these business taxes, government officials can help fuel more robust job growth. More specifically, the document revealed that while the eight states with the highest corporate income taxes experienced a cumulative job growth rate of 5.1 percent between 2003 to 2013, the eight states where companies paid the least in taxes saw their jobs expand at a rate of 12.1 percent.
Amid this progress, Meyer has asserted that reducing taxes has become an important consideration for many state governments. He predicted that as a result of this new attitude, government officials in these jurisdictions will continue to bring about a state tax reform.
How do you think your business and/or family will be affected be the state tax reform? Feel free to leave your comments below.