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Some states looking for ways around federal tax law

Wednesday, Jan 17, 2018

* Maryland

Democrats in Maryland’s state legislature on Tuesday rolled out three bills in response to the new tax overhaul that President Trump signed last month, including trying to protect state and local tax (SALT) deductions. […]

One of the bills is designed to mitigate the fact that the new tax law caps the SALT deduction at $10,000. Under the measure, Maryland residents would be able to make charitable contributions to a state fund and receive a credit against their state taxes. The donations could still be deductible from federal taxes.

The other two bills would decouple Maryland’s tax code from the federal tax code.

One would allow Maryland residents to still claim personal exemptions on their state taxes, even though personal exemptions are eliminated from the federal tax code. Lawmakers said that residents would see state tax increases absent this change.

The other would separate the Maryland and federal estate taxes. The new federal tax law increases the amount that’s exempt from the estate tax to about $11 million for an individual, and Maryland Democrats want to limit the state’s exemption about to about $5 million.

* More

The federal tax bill would ultimately cost Marylanders about $1 billion, Busch and Senate President Thomas V. Mike Miller Jr. estimated, with “$680 million in exemptions taken away.”

The bills would lower state taxes for about 92 percent of Marylanders, they said.

* Meanwhile, in New York

Gov. Andrew Cuomo’s proposed conversion from an income tax to a payroll tax would be voluntary for some businesses, officials said Tuesday.

Cuomo, a Democrat, broke with expectation and did not include details of his planned changes to the state tax code when he unveiled a $168.2 billion spending plan. Instead, the governor said his tax commissioner will release a preliminary report on the potential change on Wednesday, as well as other proposals to help high-tax New York avoid the pinch of federal limits on the deductibility of state and local taxes.

That includes, as other states have proposed, setting up dedicated funds through which New Yorkers could donate to local governments and allowing businesses to substitute payroll taxes — which are fully deductible under the federal tax bill, H.R. 1 (115) — for income taxes, whose combined deductibility with property taxes is capped at $10,000. […]

The payroll tax switch has been described by business leaders as more complicated than the donation-credit ideas advancing in New Jersey and California, but its principal benefit is its application to a wider range of people — not simply those who elect to use it, as a donation would be.

* California

The proposed California workaround, by Senate leader Kevin de Leon, is the first of what are expected to be several legislative efforts in high-tax states to mitigate the impact of the SALT deduction cap on their residents.

The average state and local tax deduction claimed by Californians is well above the cap, at $18,438, according to de Leon’s office.

To help ensure they can still deduct much or all of the state and local taxes they pay, de Leon has proposed letting residents make a charitable contribution to the state in exchange for a tax credit.

That way, the charitable contribution would be deductible on their federal return, since the new federal tax law doesn’t limit deductions for charitable gifts except in certain instances.

…Adding… HB4237

Amends the Illinois Income Tax Act. Creates an income tax credit in an amount equal to the contributions made by the taxpayer to the Illinois Excellence Fund during the taxable year. Amends the State Finance Act. Creates the Illinois Excellence Fund. Provides that moneys in the Fund shall be used for exclusively public purposes, as specified under Section 170 of the Internal Revenue Code relating to charitable contributions and gifts. Amends the Counties Code. Provides that the county board may establish a fund in the county treasury for the purpose of accepting contributions for exclusively public purposes, as specified under Section 170 of the Internal Revenue Code relating to charitable contributions and gifts and may provide for a credit against the taxpayer’s property tax liability in an amount equal to the amount of the contribution. Effective immediately.

- Posted by Rich Miller   41 Comments      

*** UPDATED x2 - Pritzker, Rauner, RGA respond *** Watch Dem candidates appear at Sun-Times

Wednesday, Jan 17, 2018

* The Chicago Sun-Times is broadcasting its editorial board meeting with the Democratic gubernatorial candidates on YouTube. Watch it

*** UPDATE 1 *** Rauner campaign…

Following the Chicago Sun-Times Editorial Board meeting with Democratic candidates for Illinois governor, Citizens for Rauner Communications Director Will Allison released the following statement:

“One thing was clear from today’s forum: no matter who wins the Democratic primary, he’ll be running on an agenda of more tax hikes on Illinois families and businesses. For JB Pritzker, he claims he has detailed plans, but when will he specify the rates on his progressive income tax proposal?” - Will Allison, Communications Director for Citizens for Rauner

* RGA…

“Today’s Chicago Sun-Times editorial board meeting was a train-wreck for Illinois Democrats, with candidates arguing amongst themselves over who is most beholden to the special interests and crooked politics that have dominated Illinois for so long. The reality is that they all have deep ties to disgraced politicians like Mike Madigan or Rod Blagojevich, and that the general election will be a stark contrast between their politics as usual and the reform agenda of Governor Bruce Rauner.” – Republican Governors Association Spokesman Steven Yaffe

*** UPDATE 2 *** Pritzker campaign…

Today, JB Pritzker demonstrated why he is the best candidate to take on Bruce Rauner and get Illinois back on track at the Chicago Sun-Times editorial board interview. JB highlighted his record of getting big things done for Illinois’ working families and standing up for progressive values while consistently holding Bruce Rauner accountable for his failed leadership. JB laid out his plans to reverse Rauner’s systemic disinvestment in Illinois communities and grow the economy statewide, demonstrating he is the candidate with the vision and leadership to move Illinois forward.

“JB is the only candidate in this race ready to take on Bruce Rauner and he made that clear at the Sun-Times today,” said Pritzker campaign manager Anne Caprara. “With his record of standing up for progressive values and his plans to grow the Illinois economy and create jobs statewide, it is clear that JB has the vision and leadership to move Illinois forward. JB was proud to hold that record up to Bruce Rauner’s record of failed leadership and will continue to make that message clear throughout this campaign.”

The campaign also released this video excerpt

- Posted by Rich Miller   27 Comments      

*** UPDATED x1 *** Kennedy needs to dig deeper, but can he?

Wednesday, Jan 17, 2018

*** UPDATE *** As I said would happen earlier today, Kennedy just reported depositing another $250K into his campaign account.

[ *** End Of Update *** ]

* Politico

But a source from the Kennedy campaign tells POLITICO that Kennedy later this week is expected to give himself a “significant boost” by once again digging into his own pockets. Kennedy so far has donated $500,000 to his own campaign fund. He’s up against billionaire J.B. Pritzker who has plowed $42 million into his bid. However, lesser known candidate, state Sen. Daniel Biss, waited to start ads until after the new year and has burned through less cash, giving him more money to play with before Election Day.

Kennedy has actually contributed $750,000 to his campaign so far. Those contributions, in $250,000 increments, have mostly been made at the end of the quarters. He can’t wait until the end of this quarter, which would fall after primary day. So, he’s planning to kick in his usual $250K later this week, I’m told.

Obviously, he needs a whole lot more cash than that. And there are those on the campaign pushing him to dig much deeper into his bank account. But Kennedy doesn’t have Pritzker or Rauner money. A longtime friend of his told me not long ago that he believed Kennedy was worth about $10 million. So, by that measure, after this next $250K check, Kennedy will have kicked in ten percent of his net worth. Pritzker would need to spend $340 million before reaching that same point.



Spending on advertising ramped up significantly this quarter, with candidates reporting a total of $15 million in advertising-related costs. This compares to just $6.2 million spent on ads in the 3rd quarter, and $7.5 million spent in the 2nd quarter. J.B. Pritzker led the pack in ad spending with $8.4 million. Governor Rauner followed close behind with $6.7 million in reported ad spending in the 4th quarter. Senator Biss reporting $85,000 in ad-related costs, while candidates Kennedy and Ives both reported about $11,000 each in ad spending. Kennedy reported an additional $32,000 in printing costs, which could include some print advertising.

Personnel was the next most costly expenditure reported by gubernatorial candidates, with a total of $3.1 million spent on staffing-related items. J.B. Pritzker reported $2 million in personnel costs, while Rauner reported just under $400,000. Chris Kennedy spent an amount close to Rauner, with $381,000, and Senator Biss reported about $300,000 in personnel costs. Total payroll costs slightly exceeded the third quarter, in which candidates reported spending a total of $2.35 million.

Finally, candidates spent heavily on consulting services. Chris Kennedy spent a considerable amount in this category, totaling about $912,000 – just over half of his $1.6 million in spending for the quarter. Over $681,000 of his consultant spending was labeled as “media consulting.” Pritzker spent the most on consulting with $1.6 million, and Rauner and Biss trailed with $376,000 and $112,000 respectively.

Man, that Pritzker and his spending. Whew. $2 million on staff? In three months?

And the way I read Kennedy’s D-2, most of Kennedy’s “media consulting” expenditures were actually for producing and broadcasting his TV ad. So, I don’t think ICPR got that one right.

- Posted by Rich Miller   14 Comments      

* Open thread 2
* Open thread
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