State Budget and Taxes

Living within Our Means

If I were to ask you how much of the state budget goes toward paying off debt, what would you say? 10%, 30%, 50%?

Try between 3% and 4%.

Amazon Takes Its Ball and Goes Home over Sales Tax Bill

According to an article in Monday’s State Tax Notes (subscription required), Amazon has decided to shutter a warehouse facility in Texas rather than pay a $269 million sales tax bill issued by the Texas Comptroller. Lost in this foot-stomping exercise are 119 warehouse jobs and any future plans of expanding in the Lone Star State.

The Texas business community is up in arms about this, but not for the reasons you would think. The President of the Texas Retailers Association said in a statement:

"We sincerely regret that Amazon's irresponsible action appears to be resulting in 119 Texans being told their jobs are being terminated. However, to allow Amazon's current practices to continue is blatantly unfair and injurious to the 1.9 million employees of Main Street Texas retailers who faithfully collect and remit sales taxes to the Comptroller."

The dispute is a common one between Amazon and the states. Amazon claims it has no legal right or duty to collect sales tax from its customers, but states like Texas, Colorado, North Carolina and New York are fighting back. Pennsylvania hasn’t joined the pack — yet.

In Case You Missed It: Third and State Blog This Week

This week, we blogged about job growth in Pennsylvania, what message President Obama should send to the U.S. Chamber of Commerce, lessons to learn from other state's fiscal woes and a whole lot more.

In case you missed it:

  • On the economy, Steve Herzenberg explained how Pennsylvania was a big winner in job performance for 2010, while New Jersey was the "biggest loser." Steve also blogged on what message President Obama should be sending to the U.S. Chamber of Commerce and weighed in on the nation's "Swiss Cheese" tax system.
  • On the state budget, Chris Lilienthal highlighted another edition of the Pennsylvania Budget and Policy Center's Fiscal Facts, and talked about lessons to learn from other states' budget challenges.
  • On jobs and unemployment, Mark Price wrote that for the long-term unemployed, the jobs just aren't there. Mark also blogged this week on strengthening the middle class and debunking bogus research on upward mobility and income 

More blog posts next week. Keep us bookmarked and join the conversation!

Lessons to Learn from Other States’ Revenue Woes

Just how difficult will it be to balance Pennsylvania’s state budget without any additional revenue? A WHOLE LOT, according to two state budget experts speaking on WITF’s Radio Smart Talk this week.

Pa. Is Not Alone! The U.S. Has a Swiss Cheese Corporate Tax System Too

I'm shocked! The U.S. corporate tax system has enormous numbers of loopholes, according to The New York Times.

One hundred and fifteen of the biggest 500 companies paid a total corporate tax rate — federal, state, and local — of less than 20%  over the last five years, even though the federal corporate tax rate alone is 35% for most companies. There are also wide variations in the tax rates that companies pay within the same industry.

It's the Recession!

So just what has been the primary cause of Pennsylvania’s fiscal challenges? Some would have you believe it is overspending, but the facts tell a different story.

In the Pennsylvania Budget and Policy Center's latest February Fiscal Facts, we find that every state (except North Dakota) has faced budget deficits in the past few years. The primary culprit: loss of state tax revenue.

Introducing Fiscal Facts: PA's General Fund Spending Lower than National Average

There has been a lot of talk about Pennsylvania's high rate of spending over the past few years. The facts tell a different story. General Fund spending in Pennsylvania is below the national average and has been for 18 of the last 20 years.

In the weeks leading up to Governor Corbett's budget address on March 8, the Pennsylvania Budget and Policy Center will be releasing a series of briefs shining a light on specific budget topics in what we hope is an interesting way. We launched February Fiscal Facts this week with a brief comparing the state's General Fund spending over time to the U.S. average.

Teachable moments

Brad Bumsted of the Pittsburgh Tribune-Review leads the latest news on Pennsylvania tax collections with the following:

Kenneth Gailey of Midland doesn't like the idea of raising state taxes or cutting benefits.

The 50-year-old contractor, who spent 16 years as a carpenter for
PennDOT, said he believes state government can make a huge dent in an
estimated $4 billion deficit by eliminating or cutting high-end salaries
for management and making government more efficient.

'Do we need more taxes? Do we need cuts in the few benefits we have?
What we need is fewer people on the high end of that pay scale.'

Is this true? 

The Good News, Bad News on Pennsylvania's Revenue Picture

General Fund revenue collections have been doing better than expected in the past few months, with January numbers reported Tuesday showing another month of healthy receipts.

The result is a General Fund revenue surplus of $264 million for the 2010-11 Fiscal Year, which ends in June. That's good news and a positive sign of the state's slow fiscal recovery, but much bigger fiscal challenges loom large on the horizon.

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