Supports estate tax repeal, but not at states’ expense
Even as they deal with declining revenue growth from a softening economy, states are scrambling to plan for the potential loss of $50 billion to $100 billion over 10 years from the repeal of the federal estate tax enacted last month.
The loss in revenue would come because states for 75 years have tied their own estate and inheritance taxes to the federal estate tax.
Governors are also chafing under a Congressional timetable that calls for the states to lose their tax revenues
by 2005 while stretching the repeal of the federal estate tax more gradually over 10 years. Jeb Bush warned about anticipated revenue shortfalls [in Florida], including the expected loss of $210 million from the estate tax in the 2002-03 fiscal year.
“While I support the eventual repeal of the estate tax,” Mr. Bush, the president’s brother, wrote, “shifting the burden merely allows Washington to spend more, while requiring us to spend less.”
Source: Kevin Sack, NY Times
Jun 21, 2001
Don’t broaden county & city taxing authority
Senate Bill 1020 would clearly expand the ability of counties and cities to generate tax revenues beyond current constitutional limitations for property taxes. The bill [clauses passed] without going through a committee and without public debate raising
concerns over the awareness of the implications of this [clause]. While I remain sensitive to the financial needs of rural counties, this legislation is not narrowly crafted address those needs. Even in the absence of this legislation, rural counties
still have other revenue-raising methods, such as municipal service taxing units, available to them to help address these needs.
Senate Bill 1020 also reduces government accountability to taxpayers by easing the requirements or conditions under which
taxpayers must be notified of increases in special assessment rates. If this bill becomes law, there could be many instances in which taxpayers would not be informed of special assessment rate increases until the change appears on their annual tax bills.
Source: Veto notification on Senate Bill 1020
Jun 1, 2001
Voter approval of tax increases; cut taxes by $1B
[In his campaign], Jeb Bush called for fewer appeals for death row inmates and speedier executions, said Florida should withdraw from AFDC and replace it with limited temporary assistance, and called for school choice and demanded voter approval of
all state and local tax increases.
In his first 100 days, Bush’s legislative agenda met with stunning success. He passed a school voucher plan, got longer prison terms for gun-toting criminals, and instituted a $1 billion tax break.
Source: National Journal, the Almanac of American Politics
Jan 28, 2000
No national sales tax or VAT.
Bush adopted the National Governors Association policy:
State tax policy is closely linked to federal policy. 36 states currently use either federal income or federal tax liability as the state tax base for personal income taxes. It is critical that Congress and the administration do not enact tax reform in a vacuum, but in consultation and in partnership with the nation’s Governors.
National Sales or Value-Added Tax The nation’s Governors oppose a national sales or transactional value-added tax. Such taxes would intrude into a tax area that has traditionally been reserved for and relied on by state and local governments. If enacted, either of these taxes would seriously threaten the ability of state and local governments to maintain their tax base.
Current Income Tax If Congress decides to reform the current tax system, they should reduce the complexity of current income taxes; increase incentives to work, save, and invest; and increase efficiency and fairness. As part of any reform of the
current income tax, the nation’s Governors would oppose any modification to the deductibility of state income taxes, property taxes, and the interest on state and local bonds.
Transition If major tax reform is enacted, it should not be implemented for at least three years, to give states ample time to adjust their own tax systems.
Information Needs of the StatesThe ability of states to tax various revenue sources depends to a large extent on information that only the federal government can collect. This is becoming much more important given the complexity of both the international and domestic economies in tracing where goods and income are generated. It is critical that the federal government separate tax reform per se from the information that is collected from individuals, businesses, and corporations with respect to income generated. The data collection role of the federal government must be developed in partnership with state and local governments.
Source: NGA Executive Committee Policy Statement EC-9 00-NGA1 on Feb 15, 2000
Let states independently determine estate taxes.
Bush adopted a letter to Congressional leaders from 37 Governors:
We are writing to request equal treatment between states and the federal government on estate tax changes. Regardless of one’s view about phasing out the federal estate tax, the Governors are absolutely united in opposing any action that would discriminate against states in the phase-out of the state and federal estate taxes. This issue needs to be addressed before the Senate goes to conference with the House.
Governors believe that the ability of states to independently determine their own tax revenue policy is a basic tenet of federalism. Moreover, no federal tax bill should be enacted without close consultation with the states.
At the very least, there must be equity in the treatment of the state death tax credit in the tax bill the Congress considers with the proposed phase-out of the federal estate tax. Governors oppose provisions that impose disproportionate impacts on state revenue systems. The changes proposed by the Senate would have abrupt, significant adverse impacts on state revenues at a particularly onerous time for many states. The potential impact on states would begin next year and have a potential impact of between $50 and $100 billion over the next ten years.
We urge the leaders to respect those rights and to restore fairness.
Source: National Governor's Association letter to Congress 01-NGA19 on May 23, 2001