Conference Creates New Tax Bill

The Tax Conference Committee met early this afternoon and put together yet another plan to bridge the budget gap of more than $400 million.

This plan will run first in the Senate, likely this afternoon. The Senate did gavel in about 2:40 but recessed so the two caucuses could review the new agreement before voting. They will return to the floor at 3:30.

The following components are in this plan:

  • Tax the guaranteed payments,
  • Sales tax at 6.55 with food dropping to 4.95 in July of 2016,
  • Increasing the cigarette tax by 50 cents/pack,
  • The MCO agreement (passed by the House last night),
  • The combined itemized deduction agreement (eliminate all but charitable contributions, home mortgage interest and property taxes paid, the latter two at 50%),
  • The amnesty plan,
  • Income tax rates at 2.7/4.6 through 2017; 2.6/4.6 in 2018; formula relief starting in 2019,
  • Eliminate the food sales tax credit, and
  • Require a SSN for certain tax credits.

The plan would raise about $480 million.

There is still no income tax on the more than 330,000 businesses exempted from the tax in 2012-13. With the formula still in place on the income tax rates, it continues the “march to zero” meaning we could be in the same place in a few years.

The new money is raised by taxing the middle class and poor through higher sales taxes, limits on itemized deductions, and the elimination of the food sales tax credit.

Last Night

It was some night last night. The House had to find legislators to vote and the Senate went into an emotional meltdown.

Folks were waiting under the dome for the tax conference committee to meet but it did not until very late. The House was voting on the MCO tax bill which has been an assumed part of nearly every tax bill but had not passed.

Unfortunately there were about 25 House members absent. Since bills must get 63 votes in order to pass, it became very difficult for the bill to be passed. It sat on the vote board with only 60 votes for a very long time. A call of the House had been instituted in order to find 63 supporters.

During a call of the House, the chamber doors are closed an no one can leave. Leadership and the Highway Patrol start searches for the missing members with the intent of bringing them back. Eventually the three needed votes were secured and the House was able to shut down. It was late and leadership decided that it was not a good idea to wait around any longer. They adjourned until 2:00 pm on Monday.

The Senate meanwhile was debating yet another tax bill and things were not going well for Chairman Donovan who was peppered with questions about the ratchet provisions and the corporate tuition tax credit expansion (vouchers).

Donovan became so frustrated that he went on a tear, telling his fellow Senators that they should be ashamed of themselves. He asked Senate President Susan Wagle to remove him from the chairmanship. She respectfully declined, saying that she had confidence in his skills and knowledge.

The Senate leadership, seeing how things were going, decided continuing into the night would not be productive and adjourned the Senate until 2:00 pm Sunday.