State income tax collections are down all over. A Reuters analysis shows that states collected less personal income tax revenue last month than in April, 2016. Analysts suggest that high earners are shifting income to next year, betting that Congress will enact federal tax cuts by then.
Even in Connecticut. After 20 years of growth, the state expects to fall $400 million short in tax collections this year. Governor Dannel Malloy secured tax increases on the wealthy twice so far, but neither hike resulted in sustained revenue growth. A third time won’t be a charm. Said state revenue commissioner Kevin Sullivan, “You can’t go back to that well again.” Instead, Malloy is asking for $700 million in concessions from public-sector unions, and a $700 million cut to state funding of cities and towns.
Still no budget or tax decisions in Kansas. The state’s House and Senate reconvene today and have yet to decide what to do first: Set a school funding plan or pass a tax bill. House GOP leaders want to pass tax legislation first in order to set spending boundary. The Democrats would prefer to establish a school funding plan first so they know how much tax revenue they’ll need to raise. The legislative session is supposed to end on Wednesday. Kansas must pass a budget or emergency legislation to keep state workers on the job by June 17.
In some states, donating to a scholarship fund can turn a “profit.” Donors to “scholarship-granting organizations” that distribute funds to parents for private school tuition can deduct their contributions from both their state and federal income taxes. For example, in South Carolina, a $20,000 donation translates into a $20,000 state income tax credit and a federal tax deduction of up to $7,000.
In the gig economy, the jig is not yet up. The Wall Street Journal explains (paywall) a loophole that some are using to avoid paying taxes. Online-platform businesses that connect buyers to sellers must report a seller’s income only if she has at least 200 transactions that generate more than $20,000, But the threshold for earnings and transactions is so high that many sellers aren’t reporting their income on their own.
This week: A budget, a CBP health score, and the border-adjustable tax. The White House will release its budget tomorrow. Little additional detail on its tax plan is expected. House Ways & Means Committee will hold a hearing tomorrow to hear testimony from both opponents and supporters of the controversial BAT. On Wednesday, the CBO will release its official score of the House-passed health bill.
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