Comparison of tax reform proposals

The chart below applies only to proposals that exist in writing. The fact is that everything is up for discussion – just because you don’t see something doesn’t mean they aren’t talking about it in the House Ways & Means committee this afternoon.

Perry plan

HB 3 (as filed)

SB 3 (as filed)

School Maintenance & Operations Taxes

Maximum allowable M&O tax rate reduced to $1.20 in 2005 and 2006; $1.15 in 2007; $1.10 in 2008 and $1.05 thereafter

Maximum allowable basic tax rate reduced to $1.15 in 2005 and $1.10 in 2006 and thereafter (does not include enrichment)

Maximum allowable M&O tax rate reduced to $1.20 in 2005 and $1.15 in 2006 and thereafter (does not include enrichment)

Enrichment Taxes

No provision, though previous press release says additional 2 cents per year, up to 12 cents will be allowed

Up to $0.15 voter-approved enrichment allowed (phased in)

Up to $0.15 voter-approved enrichment allowed (phased in)

Other property tax provisions

Homestead exemption raised from current $15,000 to $22,500 in 2006 and thereafter (requires Constitutional authorization); generally, reduces rollback threshold for cities and counties from current 8% to 5%; reduces rollback petition requirements from 10$ of registered voters to 10% of those voting in the last gubernatorial election

15% of future state revenue from HB2 is set aside to buy down M&O tax rate to $0.75

No comparable provision

Sales Tax

Sales, motor vehicles sales, and motor boat sales tax rate increased from current 6.25% to 6.95; sales tax base expanded to include repair of computer programs, elective cosmetic surgery, motor vehicle repair; timely filer discount is repealed. Motor vehicles sales price based on presumptive value (“liar’s affidavit”)

Sales tax rate increased from current 6.25% to 7.25%; sales tax base expanded to include repair of computer programs, motor vehicle repair and bottled water; timely filer discount is repealed. Motor vehicle and motor boat sales tax increased to 7.35% (taxable price based on presumptive value – “liar’s affidavit”)

Sales, motor vehicle sales (with taxable price based on presumptive value), and motor boat sales tax rate increased from current 6.25% to 6.5% and 6.75% the following year; sales tax holiday expanded to school supplies; new December sales tax holiday; sales tax rebate for low-income families

Business Tax

“Loophole closing.” Franchise tax is extended to –out-of-state corporate limited partners (Delaware Sub “fix”); corporate-owned partnership may be taxed directly if new nexus standard is not upheld; certain expenses for intangibles within affiliated groups must be added back in calculating earned surplus

Choice Tax. Franchise tax extended to all liability-protected businesses, with exemptions for certain passive income entities and health care providers; taxpayers choose between current franchise tax (with Geoffrey’s add-backs) and 1.15% payroll tax; members within an affiliated group must make same choice; taxes due may not be less that 50% the amount of the tax calculation not chosen

Basket Tax. Franchise tax extended to all business entities except sole proprietorships and certain passive income entities; earned surplus tax rate reduced to 2.5%, but base expanded to include payroll (deducting the lesser of 50% of payroll or $30,000 per employee); taxpayer chooses lesser of franchise tax (i.e., capital tax or new earned surplus tax), 1.75% payroll tax ($1,500 cap), but not less than 0.25% of gross receipts

Cigarette Tax

Cigarette tax increased by $1.012 per pack; other tobacco taxes increased by 13.5-14.0&

Cigarette tax increased by $1.00 per pack; other tobacco taxes increased by 25%

Cigarette tax increased by $0.75 per pack; other tobacco taxes increased by 25%

Other

Professional fees doubled for doctors, chiropractors, physician assistants, optometrists, psychologists, veterinarians, accountants, engineers, architects, landscape architects, interior designers, land surveyors, real estate brokers, property tax consultants, attorneys and securities dealers.

Alcohol taxes increased by 25%; deferral of motor fuels tax transfers to general revenue fund; tobacco endowment funds moved to general revenue fund; expansion of charitable bingo; Comptroller must report on tax impact of bill

This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s