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Tax & Budgets
States to Watch This Summer if You Care About Tax Policy
August 27, 2024 | Andrew Jones
July 3, 2024 | Ryan Maness
Key Takeaways:
Last month, lawmakers in Minnesota and Virginia both passed spending plans which abandoned controversial tax policies that Democrats previously supported.
In Minnesota, the House passed an omnibus tax package (MN HF 5247) in April that included, among other things, new public disclosure requirements for taxpayers with more than $250,000 in gross domestic sales and a tax study commission to consider ways to counteract business tax base erosion (this was widely seen as an opportunity to build support for taxing international income). While these were the more controversial and headline-grabbing provisions, lawmakers also included an income tax subtraction for certain kinds of debt, a new sales tax exemption for firearm safety equipment, and an expansion of the state’s data center incentive program.
When members of the Senate and the state business community balked at the disclosure and base erosion study proposals, the two chambers entered into lengthy negotiations about how to come to a final fiscal agreement. In the “chaotic” final hours of session in late May, lawmakers released and passed a final omnibus deal that not only omitted these two contested provisions, but nearly all of the other tax proposals as well.
The final version of the bill’s only tax-related provisions established a new tax exemption for data mining facilities, reduced the appropriation for the solar tax credit program, and established a Child Tax Minimum Credit.
In Virginia, the Democratic legislature battled with Governor Glenn Youngkin (R) for months over the tax provisions of the state budget. The legislature proposed expanding the sales tax to digital goods (including some business inputs), and the governor’s proposal included such an expansion (with an exemption for business inputs) with reductions to the personal income tax.
A showdown ensued after the legislature passed their plan (VA HB 30) , but the governor refused to sign it into law. Fearing a protracted fight, both sides agreed to scrap their previous plans in order to craft a new, bipartisan compromise. This new budget, which was released and passed in a day, did not include any broad tax changes.
While these proposals failed this session, they will almost certainly reappear in the future. Minnesota lawmakers have been explicit about their interest in taxing foreign income and Virginia Democrats, if they hold onto their majorities, will continue to look for new revenue.
Tax policy can be one of the most challenging areas for government affairs executives. MultiState’s team understands the issues, knows the key players, and helps you effectively navigate and engage. We offer a customized, strategic solution to help you develop and execute a proactive multistate tax legislative agenda. Learn more about our Tax Policy Practice.
August 27, 2024 | Andrew Jones
June 25, 2024 | Ryan Maness
April 9, 2024 | Morgan Scarboro