Friday, June 3, 2011

The Week That Was: Money, Money, Money ...

Tweet

State revenue — or lack of it — and the need to raise more seems to have been the recurring theme in a flurry of reports released last week.

Unclaimed Property
Unclaimed property audits, particularly by contract auditors, are one way states can obtain revenues without raising taxes. The practice has become so common — and apparently effective — that The Council On State Taxation (COST) issued  a report urging a comprehensive reform of "wildly inconsistent" state escheat laws. In a study issued Oct. 21, co-authors Kendall Houghton and Maryann Luongo, of Baker & McKenzie LLP, and Jana Leslie, of COST, detail some of the more aggressive practices of the states, which tend to be less concerned about restoring unclaimed property to its rightful owner and more preoccupied with converting that property to state use. The COST report  outlines several avenues for reform, examining the pros and cons of initiating a uniformity project in various forums. One idea: Create a "joint state/holder/owner initiative" along the lines of the Streamlined Sales Tax Project to create a uniform unclaimed property law that "safeguards holders' and owners' due process rights."

Illinois Income Tax Overhaul
Illinois' current and long-term revenue needs may require an overhaul of the state's income tax system, forcing the state to abandon its constitutionally mandated flat tax system.

In an October 19 report, the Institute on Taxation and Economic Policy (ITEP) urged the state to implement a 50 percent income tax increase proposed by Gov. Pat Quinn (D) as well as a graduated income tax scheme advocated by his rival in the 2010 gubernatorial primary, Illinois Comptroller Dan Hynes (D).

ITEP said both schemes are needed to help Illinois navigate its current fiscal crisis and create a revenue structure that is fair and sustainable on a long-term basis.

Has Colorado's TABOR Hampered Economic Growth?
Has Colorado's Taxpayer Bill of Rights (TABOR) “hampered economic growth and reduced quality of life” in the state?

It depends who you ask. The  Center on Budget and Policy Priorities (CBPP) says yes. In an Oct. 19 report warning Maine voters to defeat a similar tax-and-spending limitation measure, the CBPP argued that TABOR did not contribute to the state's economic growth in the 1990s, but impeded it.
The CBPP study was issued in response to an Oct. 12 study by the Maine Heritage Policy Center (MHPC) that credited Colorado's TABOR for the state's “superior economic performance” from 1997 to 2007.  Between fiscal years 1990 and 2008, the MHPC report said, Colorado's personal income tripled, while population growth grew by 49 percent. As a result, Colorado had the 13th highest income per person in the country — $42,377 “for every man, woman and child,” the report said.

The CBPP report called the Maine Heritage report “misleading in several respects.”
“Colorado's economy was particularly strong in the 1990s because of heavy investment by the military and the federal government in the state, and the high level of education of its residents,” it said. “Both of those conditions existed pre-TABOR and boosted economic growth,” it added. Since then, TABOR harmed Colorado's economy by not letting the state recover adequately from the 2001 recession, and Maine per capita income has been growing at a faster rate than Colorado's, the CBPP said.

— By Dolores Gregory with Mike Bologna in Chicago and Tripp Baltz in Denver

All BNA publications are subscription-based and require an account. If you are a subscriber to the BNA publication and signed-in, you will automatically have access to the story. If you are not a subscriber, you will need to sign-up for a trial subscription.