50 State Flyby: Week of July 15th

Minnesotais looking like they have a tentative deal on a budget solution. The compromiseis essentially the budget deal Republicans offered Governor Dayton before thestate shutdown for two weeks. Differences between the two sideswill be covered by $700 million in defered K-12 payments and $700 million instate bonds using tobacco settlement funds. Additionally, the Governor calledfor halting a plan to cut the state workforce by 15%, stripping policy riders fromthe budget, and passage of a $500 million bonding bill.

WhetherDayton’s change in heart on soaking the rich comes from political pressure, or threatof bars going dry, the deal as it stands now does not contain any new taxes. 


Beforeheading out for a break, the California Assembly narrowly defeated ACA 6. Requiringa 2/3 majority for passage, it failed 50-23. The folks at HowardJarvis Taxpayers Association have been on top of the attempt to radicallyrewrite the initiative process in California.

ACA 6 would prohibit any initiative from even being voted onif, in the opinion of either the Legislative Analyst or the Director ofFinance, the measure did not “pay for itself.”

Themost telling aspect of ACA 6 is that if it had been on the books in 1978, Prop13 likely would never have gone to the voters.


Itis not a huge secret that pension reform looms large over many states. The Mackinac Center published a reportthis week detailing the billions in savings achieved in 1997 when the statemoved from a defined benefit to defined contribution plan for most newhires. 

Asstates attempt to reform unfunded liabilities in public pensions they would dowell to follow Michigan’s example.

California (Again)

Amazon.comdecided to file a referendum to repeal the recently passed affiliate tax. Whilethings are about to get litigious,affiliate taxes remain terrible policy.

AsNTU’spress release earlier in the week states, companies such as Amazon have very little incentive to submit to such onerous requirements. It is far easier for the large online retailers to terminate their affiliate programs. Amazon's decision to cancel its 10,000 contracts falls in line with what happened in North Carolina, Rhode Island, New York, and elsewhere. Meanwhile, the state will not reap the predicted $150 million revenue windfall, and will likely cost itself a healthy portion of the current $125 million in existing taxes collected from affiliates.

NTU argues against these proposal because they attempt to impose a burden on businesses which do not have a physical presence in the state. Further, the big box stores, Best Buy, Wal-Mart, etc. account for a large percentage of online sales and are subject to a state's sales and use tax. Amazon taxes end up having the effect of punishing small affiliates for little, if any, gain to the state.

New York

Sportsfans – Next time you have a chance to grab a part of history, remember the taximplications.