Weekly Round-Up: States Reluctant To Raise Taxes in 2015

As states ring in the New Year, there is hope that the slow progress that characterized the states’ fiscal health in 2014 will continue in 2015, Bloomberg BNA State Tax Law Editor Radha Mohan writes in the 2015 State Tax Outlook.

Although the fiscal climate for the states greatly improved, cautious optimism remains the hallmark of all fiscal and revenue forecasts for 2015.

As state tax revenues gradually recover, most states will continue to approach budget decisions with caution, with the exception of certain states that enacted substantial tax cuts, such as Kansas, Mohan writes.

In 2015, there seems to be little appetite to raise taxes, with the exception of a few targeted increases in certain taxes, such as the gas tax and cigarette tax. The results of the 2014 elections indicate that most states, including those that slashed taxes, will continue their current approach in the New Year.

The results of these budgetary decisions will become apparent when states meet in June to set the budget for the next biennium. States will have to continue to balance the pressure to provide tax relief against the demand for additional spending on public initiatives, Mohan says.

With limited resources, 2015 will be marked by the need for states to increase spending on public programs, such as education, Medicaid, transportation and other infrastructure needs, while balancing pressure from taxpayers to provide tax relief, Mohan writes.

Some notable developments from the State Tax Developments Tracker – Bloomberg BNA’s new tool for monitoring important developments in all the states:

South Carolina Department of Revenue Publishes Draft Revenue Ruling on Construction Material Exemption for Manufacturing and Distribution Facilities

Washington Department of Revenue Issues Excise Tax Advisory on Impact of Getty Images Decision

North Carolina Department of Revenue Issues Guidance on 2014 Tax Law Changes

For more information about this and other state tax issues, sign up for a free trial of the Bloomberg BNA Premier State Tax Library.

In other developments…

Massachusetts Issues Final Revised Market-Sourcing Regulation; Multistate Tax Commission Working Group Continues Project Based on Massachusetts Regulation, by Sutherland

Asset Management state tax developments, looking back, looking ahead, by PwC

South Carolina Governor Offers Tax Swap, the Tax Foundation

Compiled by Priya D. Nair

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