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Archive for the ‘Budget & Tax News’ Category

Barely three months after the Virginia Supreme Court struck down hundreds of millions of dollars in taxes and fees intended to fund transportation, Gov. Tim Kaine (D) launched a campaign to raise taxes and fees to replace the ones ruled unconstitutional.

In early June Kaine announced a plan to raise the retail sales tax from 5 cents to 6 cents on the dollar in the Hampton Roads and Northern Virginia areas. He also proposed raising the areas’ sales tax on cars from 3 percent to 4 percent, adding $10 to the yearly auto registration fee, and increasing taxes on home sellers. The money, he says, would be used to address traffic congestion in the affected areas.
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Congress is finishing work begun in 2006 to remedy an unintended consequence of the Alternative Minimum Tax (AMT)–the treatment of a form of employee compensation called incentive stock options (ISOs).

The House of Representatives passed legislation in May 2008 as part of the Renewable Energy and Job Creation Act of 2008 (HR 6049) fully restoring the economic incentives and benefits Congress intended for ISOs when it allowed companies to offer them beginning in 1981.
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The nation’s two presumptive major political party candidates for president have joined Sens. Tom Coburn (R-OK) and Tom Carper (D-DE) in introducing legislation to enhance a landmark spending transparency measure that became law two years ago.

The Strengthening Accountability and Transparency in Federal Spending Act, backed by expected Republican Party nominee Sen. John McCain (R-AZ) and anticipated Democratic Party nominee Sen. Barack Obama (D-IL), would codify into law several features voluntarily incorporated into the USAspending.gov spending transparency Web site. It also would make some technical improvements to the earlier law.
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North Carolina Gov. Mike Easley (D) managed to offend both the mentally ill and beer drinkers when he unveiled his budget for Fiscal Year 2009.

His proposed budget includes new taxes on beer, wine, and spirits to pay for mental health reform, and higher taxes on cigarettes to pay for teacher raises, as well as a $1 billion increase in general fund spending on operations.

“My thought is, if four cents a can, if that causes somebody economic hardship, then they’re probably drinking too much and going to be customers of mental health, substance abuse sooner or later anyway,” Easley said in defending his beer tax proposal.
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California Gov. Arnold Schwarzenegger (R) has proposed borrowing against future earnings in the state lottery to solve the state’s budget deficit, currently estimated at $17 billion.

Schwarzenegger’s office says the borrowing decision avoids cutting funds for education, state parks, beaches, and California prisons. But success in the plan would require a several-billion-dollar growth in the “underperforming” lottery, according to analysts, and could cost at least $23 billion in interest over 30 years to repay $15 billion in borrowed money.
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Has the day arrived for states to “cash in” on private payoffs from lotteries, leaving this business to the pros? Policy analysts are asking the question as lottery revenues in many states are coming in below expectations, leaving less for state coffers without tricks or gimmicks.

In an article last year for the Gambling Compliance Ltd. Web site (“US Lotteries Maturing, Looking to Counter Player Fatigue”), business reporter Scott Van Voorhis wrote, “State lotteries across the US are turning to ever-higher priced instant tickets, sometimes up to US$20 each, and innovative marketing tricks, in their bid to find new growth in an era of stagnating revenues.”
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The dominoes have yet to fall toward lottery privatization as a way to add more money to state government coffers, but several persevering governors continue to look closely at the idea.

“In nearly all the states where lottery privatization has been proposed the executive was the proponent,” said Arturo Perez, a fiscal analyst for the National Conference of State Legislatures (NCSL) who has been tracking the issue. “It’s possible that we will continue to see this as an option that states will consider for raising new revenue.”
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