State Taxes

If you have been watching the endless coverage of this Sunday’s Super Bowl match-up, you have probably realized that most of the conversation has been centered around the quarterbacks (as is usually the case). While Trent Dilfer and Steve Young talk about what they like and dislike about Packer’s QB Aaron Rodgers and Steelers’ QB Ben Roethlisberger respective styles, not much is being made of the star’s tax liabilities. Well, the Wall Street Journal has taken the liberty to shed light on this topic. According to the article:

Take the Packers’ fleet-footed quarterback Aaron Rodgers. He made $8.6 million in 2009, according to USA Today’s database of player salaries. Of that, we calculate he paid roughly $680,000 in state and $3.1 million in federal income and payroll taxes. Steeler quarterback Ben Roethlisberger didn’t earn as much, but he got to keep a relatively larger chunk of his haul—$4.6 million of his $7.7 million salary. (This excludes taxes paid to states that tax players visiting on away games.) Unlike Wisconsin, which has a graduated income tax that charges top earners 7.75% on earnings over $220,000, Pennsylvania has a 3% flat rate. Even football players can behold the merit of a flat tax.

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According to a Tax Foundation article, on January 26th, a federal judge enjoined enforcement of a Colorado law that essentially places the burden of collecting state and local taxes for purchases made on online, on the online retailer. This legislation, which is often referred to as an “Amazon tax,” has been challenged on Constitutional grounds. The article states that Judge Robert E. Blackburn held that “the plaintiff has shown a substantial likelihood that it will succeed in showing that the act and the regulations are discriminatory because, in practical effect, they impose a burden on interstate commerce that is not imposed on in-state commerce.”

Currently, New York, North Carolina, and Rhode Island, have laws that requires retailers that have contracts with “affiliates”-independent persons within the state who post a link to an out-of-state business on their website and get a share of revenues from the out-of-state business-to collect the state’s sales and use tax. Other states are considering imposing similar Amazon tax laws.

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If you happen to  be attending the AFC or NFC Championship game in Pittsburgh or Chicago (respectively) and planning on having a beer, smoking a cigarette, buying a new sweater or driving to the game (or any combination of these) you may be interested in this chart. It lists the sales, gas, beer, spirits, and table wine taxes in Pennsylvania and Illinois as of February 1, 2010.  The data was compiled by Tax Foundation and I modified the chart to cater to today’s games.

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Tax Foundation has recently published a special report State Tax Changes During 2010. Here are the key findings:

• Due to a combination of improving revenues and growing political opposition to increased state-level taxes and additional federal aid to states, 2010 was a lighter year on state-level tax changes than anticipated. But as temporary federal stimulus aid ends in mid-2011 and with many states still not balancing their projected revenues with desired expenses, 2011 may be a year of dramatic tax increases.

• In addressing gaps between desired spending and projected revenues, state officials have relied on three choices: raise taxes, roll back spending growth commitments made during previous years and take actions to spend no more than the state brings in, or use one-time funds and accounting gimmicks to paper over the current state budget shortfall, without significantly curtailing spending.

• Most of the states that raised taxes in 2010 have aimed the increases at specific groups, such as high-income earners, smok­ers, or out-of-state business transactions. These revenue sources may provide short-term relief but can cause harm to the state economy in the short and long term.

• State policymakers should learn two lessons from California: revenue surges in good times will not continue indefinitely, and the more reliant a state is on high-income earners, the bigger hit it will sustain when those revenue surges eventually end.

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C’Mon Man! — Tax Edition

by Joshua on January 4, 2011

Fountain Soda Drink Tax! C’Mon Man!

See America’s strangest taxes, Huffington Post

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State Tax Policy Changes in 2010

by Joshua on August 26, 2010

Tax Foundation has posted A Review of 2010′s Changes in State Tax Policy. The article provides key changes in state income, sales, and other selective sales taxes such as cigarette taxes and soda taxes. A link to the article is below.

A Review of 2010′s Changes in State Tax Policy

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From the Wall Street Journal:

State tax officials, under orders from cash-strapped Albany to ramp up their audit and compliance efforts, have begun to enforce one of the more obscure distinctions within the state’s sales tax law.

In New York, the sale of whole bagels isn’t subject to sales tax. But the tax does apply to “sliced or prepared bagels (with cream cheese or other toppings),” according to the state Department of Taxation and Finance. And if the bagel is eaten in the store, even if it’s never been touched by a knife, it’s also taxed.

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When you step up to order your cheeseteak at Pat’s King of Steaks, you order it “wit or wit out” onion. Well, for bloggers in Philly, they can only maintain their blog wit a tax. According to multiple articles, Philadelphia imposes a $300 “business privilege license” tax on local bloggers in addition to city wage taxes and taxes on net profits earned from blogging.

NBC Philadelphia: Pay Up or Shut Up: Bloggers Charged $300 For Their Thoughts
Washington Examiner: Philly requiring bloggers to pay $300 for a business license
Mashable:Philadelphia Tax Code Sparks Big Controversy with Small Bloggers

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On Friday, a New Jersey state tax court ruled on appeal that a filing by three Trump casinos for overpaid utility taxes was barred by the four-year statute of limitations. The appeal was to recover nearly $3 million in overpaid taxes which were charged in error by Atlantic City Electric between 1998 and 2001. The appeals court dismissed Trump’s attorneys argument that the statute of limitations should have been extended because the tax was not clear on the bill. The court held that the error could have been discovered earlier.

Court Opinion

Businessweek, Trump casinos lose appeal on $2.7 million tax overpayment

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Happy Holidays! State Sales Tax Breaks Start

by Joshua on August 9, 2010

For those that are in the market for a new Jansport backpack, a new lunchbox, or trapper keeper, now may be the perfect time to make your purchase. In many states, this month marks the start of sales tax holidays. WalletPop has kindly listed which states are offering a sales tax breaks and the dates the the sales tax holiday runs through. For many states on the list, sales tax holiday season is over. However, if you live in one of these states you are in luck.

Connecticut: From Aug. 15-21, clothing and footwear costing less than $300 per item are exempt. Store rain checks for clothing — given out to customers when an item is on back order — are also good for the tax holiday. So if something is sold out and you get a rain check for it during the tax holiday, you won’t have to pay sales tax when the item is available.

Florida: From Aug. 13-15, clothing and books costing $50 or less and school supplies of $10 or less. Items bought at a theme park such as Walt Disney World, hotels or airports are still taxable.

Illinois: Through Aug. 15, clothing, shoes and school supplies costing less than $100 each.

Maryland: From Aug. 8-14, clothing and shoes of $100 or less are exempt from sales tax.

Massachusetts: Aug. 14 and 15, most items costing $2,500 or less are exempt from the sales tax. While beer, wine and liquor bought to be consumed later are exempt from sales tax that weekend, cars, boats and tobacco products are still subject to the tax.

Texas: On Aug. 20-22, clothing, footwear and school backpacks of $100 or less per item are exempt.

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