State House Democrats want to raise about $760 million in taxes by shrinking a long list of tax exemptions and collecting more money from smokers, lawyers, accountants and out-of-state businesses.
State House Democrats want to raise about $760 million in taxes by shrinking a long list of tax exemptions and collecting more money from smokers, lawyers, accountants and out-of-state businesses.
The plan, announced Monday, is the latest of three proposals from state leaders as they seek to bridge a $2.8 billion budget deficit.
Debate over the tax plans now heads into high-pressure negotiations with Democratic Gov. Chris Gregoire and the Senate's majority Democrats, with just 10 full days left in the 2010 legislative session.
The House proposal is nearer to the laundry-list approach favored by Gregoire. It does not include a general sales tax increase, which was a central part of the Senate's tax blueprint.
"Our focus was on removing exemptions and closing loopholes," said House Finance Committee Chairman Ross Hunter, D-Medina. "This approach makes sure everyone is doing their fair share in helping our state get back on its feet."
The package also was tailored with an eye toward surviving a challenge in the fall elections. If they're unable to scuttle it during the legislative session, tax hike opponents could file a ballot initiative to give voters the final say.
Gregoire gave the House approach a positive review Monday, repeating her criticism that a general sales tax increase could hurt Washington.
"While I know we have to raise revenue, I want to do it in a way that doesn't jeopardize our recovery," she told a news conference.
The House plan does, however, significantly broaden the sales tax base by eliminating about $205 million in exemptions on cstom software, candy and gum, bottled water, janitorial services and plastic surgery - with an exception for medically needed reconstructive procedures.
Residents of other states also would lose the ability to waive Washington sales tax on purchases made here. The tax currently is 6.5 percent, although local governments add their own levies, pushing the rate above 9 percent in the most expensive areas.
The House plan also raises about $247 million by overhauling parts of the tax code. Another $73 million comes from altering how out-of-state businesses are taxed - aimed mostly at credit-card issuers, banks and other financial firms.
A laundry list of other exemptions and preferences would be closed or downsized, accounting for roughly $174 million, including breaks on the interest which banks collect for first mortgages, and investments by nonfinancial firms, with exemptions intended to help smaller companies.
Only two pieces of the House plan appear to be straight-ahead hikes: An extra $1 per-pack tax on cigarettes, and a temporary 0.5 percent increase in the business taxes paid by certain service professionals, including lawyers, consultants and accountants.
Since House leaders earlier said they wanted enough revenue to pay for nearly $860 million in programs, their revenue plan also counts on an additional $100 million to be transferred into the general fund from the state construction budget and lottery proceeds.
The Legislature's overall budget plans also rely on hundreds of millions of dollars in spending cuts, federal aid and one-time accounting fixes. Those figures will be worked out in negotiations - the House's budget proposal called for about $650 million in cuts, the Senate's roughly $830 million.
Republicans have staunchly opposed the Democratic drive for higher taxes, saying the majority hasn't done enough to downsize government and cut state worker compensation.
"These tax increases will lead to more layoffs and further delay employers from hiring back workers," said Rep. Ed Orcutt, R-Kalama. "Also, it will further erode the ever-decreasing buying power of low- and middle-income families."
Democrats respond that they closed a $9 billion deficit last year without general tax increases, and they must raise some taxes while cutting spending.
As always if you have any questions or comments please email me at rondazaragoza@gmail.com. I will try and reply to your question within 24-48 hours of receipt.
Monday, March 1, 2010
IRS Issues Winter 2010 Statistics Of Income Bulletin
The Internal Revenue Service today announced the release of the winter 2010 issue of the Statistics of Income Bulletin, featuring data on: preliminary 2008 individual income taxes, 2007 marginal income tax rates and 2007 sales of capital assets.
Taxpayers filed 142.4 million individual income tax returns for 2008, which was 0.5 percent fewer than the 143.0 million returns filed for 2007. Adjusted gross income (AGI) also declined between 2007 and 2008, falling by 3.7 percent to $8.2 trillion. This was the first time since 2002 that AGI decreased from the previous year. Also between 2007 and 2008, taxable income decreased 5.1 percent to $5.6 trillion, total income tax decreased by 6.2 percent to $1.0 trillion, and total tax liability fell by 6.0 percent to just under $1.1 trillion.
Individual income tax returns reporting a tax liability in 2007 faced an average tax rate of 13.8 percent, the same as in 2006. Taxpayers with AGI of at least $410,096, the top 1 percent of taxpayers, accounted for 22.8 percent of AGI in 2007, an increase of 0.8 percentage points. These taxpayers accounted for 40.4 percent of total income tax reported in 2007, an increase from 39.9 percent in the previous year.
For 2007, taxpayers realized $914.0 billion in net capital gains less losses, reported on 283.1 million asset transactions with overall sales of $5.3 trillion. Passthrough income represented the largest share of net gains less losses, followed by corporate stock.
This issue of the SOI Bulletin also contains articles on the following subjects:
Projections: A grand total of 238 million tax returns are expected during calendar year 2010.This is 1 percent fewer than estimated 2009 filings of 240.4 million returns.The primary cause is the residual effect of the Economic Stimulus Act of 2008, which in 2009 produced an estimated 14.4 million returns above baseline projections.Grand total return filings are projected to reach 253.6 million by 2016.
Foreign recipients of U.S. income: U.S.-source income payments to foreign persons rose to $646.5 billion in 2007.Foreign corporations received $472.0 billion (73.0 percent) of the total, while foreign governments and international organizations collected the next largest share, $41.9 billion (6.5 percent).Foreign partnerships and foreign trusts (3.0 percent) and foreign individuals (2.7 percent) received a combined $37.0 billion in gross income.
Split-Interest trusts: The Pension Protection Act of 2006 brought major revisions to the Split-Interest Trust Information Return for 2007.All split-interest trusts must now disclose the names of charities that receive distributions and the amount and type of distribution.Income from charitable lead trusts and pooled income funds is reported on this return, rather than on Form 1041.Information not pertaining to individuals is now open to the public.In 2008, 123,498 returns were filed; 94 percent were filed for charitable remainder trusts.
Unrelated business income tax: Charitable and other tax-exempt-organizations reported $11.3 billion in gross unrelated business income for 2006, offset by $10.0 billion in deductions.The resulting net unrelated business taxable income totaled $1.3 billion, which is 6 percent higher than for 2005.These organizations reported unrelated business income tax for 2006 of $556.2 million.
Interest-Charge Domestic International Sales Corporations: IC-DISC export gross receipts increased by 266 percent from 2004 ($5.3 billion) to 2006 ($19.3 billion). Net income (less deficit) rose from $448 million to $1.7 billion, and actual distributions to shareholders increased 317 percent, from $433 million to $1.8 billion.
As always if you have any questions or comments please email me at rondazaragoza@gmail.com. I will try and reply to your question within 24-48 hours of receipt.
Taxpayers filed 142.4 million individual income tax returns for 2008, which was 0.5 percent fewer than the 143.0 million returns filed for 2007. Adjusted gross income (AGI) also declined between 2007 and 2008, falling by 3.7 percent to $8.2 trillion. This was the first time since 2002 that AGI decreased from the previous year. Also between 2007 and 2008, taxable income decreased 5.1 percent to $5.6 trillion, total income tax decreased by 6.2 percent to $1.0 trillion, and total tax liability fell by 6.0 percent to just under $1.1 trillion.
Individual income tax returns reporting a tax liability in 2007 faced an average tax rate of 13.8 percent, the same as in 2006. Taxpayers with AGI of at least $410,096, the top 1 percent of taxpayers, accounted for 22.8 percent of AGI in 2007, an increase of 0.8 percentage points. These taxpayers accounted for 40.4 percent of total income tax reported in 2007, an increase from 39.9 percent in the previous year.
For 2007, taxpayers realized $914.0 billion in net capital gains less losses, reported on 283.1 million asset transactions with overall sales of $5.3 trillion. Passthrough income represented the largest share of net gains less losses, followed by corporate stock.
This issue of the SOI Bulletin also contains articles on the following subjects:
Projections: A grand total of 238 million tax returns are expected during calendar year 2010.This is 1 percent fewer than estimated 2009 filings of 240.4 million returns.The primary cause is the residual effect of the Economic Stimulus Act of 2008, which in 2009 produced an estimated 14.4 million returns above baseline projections.Grand total return filings are projected to reach 253.6 million by 2016.
Foreign recipients of U.S. income: U.S.-source income payments to foreign persons rose to $646.5 billion in 2007.Foreign corporations received $472.0 billion (73.0 percent) of the total, while foreign governments and international organizations collected the next largest share, $41.9 billion (6.5 percent).Foreign partnerships and foreign trusts (3.0 percent) and foreign individuals (2.7 percent) received a combined $37.0 billion in gross income.
Split-Interest trusts: The Pension Protection Act of 2006 brought major revisions to the Split-Interest Trust Information Return for 2007.All split-interest trusts must now disclose the names of charities that receive distributions and the amount and type of distribution.Income from charitable lead trusts and pooled income funds is reported on this return, rather than on Form 1041.Information not pertaining to individuals is now open to the public.In 2008, 123,498 returns were filed; 94 percent were filed for charitable remainder trusts.
Unrelated business income tax: Charitable and other tax-exempt-organizations reported $11.3 billion in gross unrelated business income for 2006, offset by $10.0 billion in deductions.The resulting net unrelated business taxable income totaled $1.3 billion, which is 6 percent higher than for 2005.These organizations reported unrelated business income tax for 2006 of $556.2 million.
Interest-Charge Domestic International Sales Corporations: IC-DISC export gross receipts increased by 266 percent from 2004 ($5.3 billion) to 2006 ($19.3 billion). Net income (less deficit) rose from $448 million to $1.7 billion, and actual distributions to shareholders increased 317 percent, from $433 million to $1.8 billion.
As always if you have any questions or comments please email me at rondazaragoza@gmail.com. I will try and reply to your question within 24-48 hours of receipt.
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