Tax Break

Governors call for tax cuts in 2012 despite uncertainty

January 23, 2012

New Jersey's Chris Christie wants tax cuts

In December, hopeful children around the world mailed in their requests to Santa Claus. Now it’s January, and governors across the country are standing before citizens and legislatures using State of the State addresses to lay out their wishes for the coming year. Top of the list, with a few notable exceptions, are tax cuts.

State revenues have climbed from 2009 and 2010 lows, largely on increasing individual income tax receipts. Still, that recovery is seen as tenuous due to a generally tepid economy and concerns that pivotal federal funding to the states could be on the cutting block as the country struggles with its growing debt and deficit.

Governors of a few states, including New York and Missouri, are not calling for cuts but say their states can avoid increasing taxes by relying on shrinking government and other moves to balance their budgets.

On Tuesday, President Barack Obama gives his State of the Union address. Though one of the topics is likely to be taxes, in a presidential election year few expect tax talk in Washington to move much beyond the podium.

More action may come at the state level.

Here’s what some governors have called for already in their State of the State addresses and budget proposals:

Alaska: Tax breaks for oil industry

Governor Sean Parnell asked state lawmakers to increase tax breaks for the oil industry to spur new investment.

Arizona: No extension of sales tax increase

Governor Jan Brewer promised to fight proposals to extend past its 2013 expiration, a temporary 1 percent sales tax increase. The increase to 6.6 percent was approved by voters in May 2010, when the state was making deep budget cuts.

California: Higher sales tax for all, higher income tax for some

To deal with California’s gaping budget hole and gridlock in Sacramento, Governor Jerry Brown is sponsoring a November ballot initiative calling on citizens to vote to raise their own sales tax by half a cent and increase income taxes for those earning more than $250,000 a year for a limited time. Brown’s proposed 2013 budget assumes the initiative passes, generating $7 billion. More permanent tax reform, Brown told legislators, will take more time.

Florida: More modest push for lower business taxes

Last year Florida governor Rick Scott proposed $2 billion in tax cuts that included eliminating the corporate income tax and slashing property taxes by hundreds of millions of dollars. This year he proposed more modest cuts aimed at smaller businesses and manufacturers.

Iowa: Cut commercial property taxes

Iowa Governor Terry Branstad wants to lower commercial property taxes by 40 percent over the next 8 years and offer more business tax credits for jobs and facility expansion.

Kansas:  Cut income tax rates of the well-to-do

Kansas Governor Sam Brownback would reduce income tax rates, including ending state taxes on business income that flows through S corporations, and eliminate or modify a number of existing tax breaks.

Maryland: Internet sales taxed, a jump in income taxes for some

Governor Martin O’Malley wants remote online sellers like to collect taxes on sales to Maryland residents, and an income tax increase that would come from limiting deductions for those with income over $100,000. He also would increase taxes on tobacco products and digital downloads and end some corporate tax breaks.

Nebraska: Lowering income taxes, ending the inheritance tax

Nebraska Governor Dave Heineman proposed $326.6 million in income tax cuts over three years and an end to the state’s inheritance tax, plus a reduced corporate tax on income over $100,000, lowering the rate from 7.81 percent to 6.7 percent.

New Jersey: Tax cuts for all

Governor Chris Christie (pictured) proposed a 10 percent cut in income tax rates for all citizens and a hike in the state’s earned income tax credit.

South Carolina: End state corporate income tax, cut individual tax rates

Elected in 2010 on a promise to end the state’s corporate income tax, Governor Nikki Haley proposed phasing out the tax over four years beginning Jan. 1, 2013. She also would like to collapse the state’s six individual tax brackets to three and cut the rates.

Washington: New tax on oil

Washington Governor Chris Gregoire wants a new tax on oil to pay for transportation improvements statewide, with every barrel of oil produced in Washington State assessed a $1.50 fee, generating an estimated $3.6 billion over 10 years.

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