Los Angeles County CA – Measure H

Measure H goes into effect October 1, 2017

Measure H, a sales tax measure to fund homeless services and prevention,  was on the ballot for Los Angeles County voters, on March 7, 2017 and was approved by the required two-thirds super majority.

The result is a 0.25% increase in the sales tax rate in Los Angeles County effective October 1st.  This will bring the rate in unincorporated Los Angeles County and incorporated cities lacking a district tax to 9.5%.

Some cities in the county, however, will not increase because they are already at the maximum combined district rate of 10.25%.  Those cities are:

  • Compton
  • Long Beach
  • Lynwood
  • Mirada
  • Pico Rivera
  • Santa Monica
  • South Gate

In the event that a local tax in the above named cities should expire, then the Measure H rate will kick in immediately.

Measure H is set to expire in ten years on September 30, 2027.

 

Washington State sales tax held hostage

Conditional legislation holds the fate of the Washington state sales tax

Washington voters recently approved an unusual ballot initiative which effectively holds the state sales tax hostage unless legislators propose a separate constitutional amendment related to future tax increases. Assuming the initiative survives an ongoing court challenge, the Washington legislature has until next April to approve a second referendum for the 2016 election. Otherwise, residents will see an immediate 1% cut in the statewide sales tax.

state sales taxMany states allow voters to enact legislation directly through an initiative process. In Washington, voters may initiate ordinary legislation but not amendments to the state’s constitution, which must be proposed by the legislature. This has frustrated efforts by anti-tax activists in the state to legislate a “supermajority” requirement for tax increases. A “supermajority” means each house of the Washington legislature would have to approve any future tax increase by a two-thirds vote rather than a simple majority. Although voters have passed a number of supermajority initiatives in recent years, they have either been suspended by the legislature or struck down as unconstitutional by the Washington Supreme Court. In a 2013 decision, the court held any supermajority rule required a constitutional amendment.

Since the legislature will not approve such an amendment on its own, supermajority proponents switched tactics. They proposed a new initiative, I-1366, which mandates a 1% cut in the state sales tax – reducing it from 6.5% to 5.5% – unless the legislature “first proposes” an amendment to the state constitution which would “require that for any tax increase, either the voters approve the increase or two-thirds of each house of the legislature approve the increase.” The initiative sets an April 15, 2016, for the legislature to act.

In the recent Nov. 3 election, Washington voters approved I-1366 by a margin of about 45,000 votes. But that does not mean the controversial measure will become law. Opponents of the law, including many local governments, have already filed a lawsuit challenging the initiative’s constitutionality. Specifically, opponents claim I-1366 is “beyond the scope of the people’s initiative power.” This past August, a Seattle judge declined to remove the measure from the ballot. On Sept. 4, the Washington Supreme Court upheld that decision.

The Supreme Court did not settle the underlying constitutional challenge to I-1366. Rather, it held the purpose of the measure was “not sufficiently clear” enough to warrant injunctive relief before the election. The lack of clarity refers to the dispute over what I-1366 actually proposes. Opponents argue it is an improper attempt to amend the state constitution by initiative. But proponents claim it is merely “conditional legislation” whose primary purpose is to cut the sales tax.

Indeed, conditional legislation is a common governmental practice. Congress often uses such legislation to condition federal funds on certain acts by states or private parties. For example, states raised their legal drinking age to 21 after Congress made it a condition for continuing to receive federal highway funds. But this is likely the first time a voter initiative has conditioned a state’s ability to collect taxes on a future legislative action.

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog PrivyCouncil.info

Kentucky House approves local option sales tax

Forty-six states currently impose a statewide sales tax of some kind. In most of these states the rate is not uniform throughout but varies among cities and counties. This is because 37 states allow for a “local option sales tax,” a process where an individual locality may choose to add a surcharge to the statewide tax rate. Local governments frequently use local option taxes to help defer the costs of capital improvements or special projects.local option sales tax in Kentucky

Kentucky may soon become the 38th state to allow this practice. On Feb. 12, the Kentucky House of Representatives voted 57 – 38 to allow localities to impose their own sales and use taxes. This, of course, is only a first step. The Kentucky Senate must still approve this measure as well as a proposed amendment to the state’s constitution. The constitutional amendment is necessary because Kentucky’s legislature does not currently have the legal authority to permit local option taxes.

Under the proposed amendment, which the Kentucky House approved by a 62 – 35 vote, the legislature may permit cities and counties to impose a sales tax of up to 1%. Any such levy would be added to the existing statewide Kentucky sales tax of 6%. Any proposed local option sales tax must be separately approved by the voters of the city or county, and the net proceeds of any tax must go to “the completion of capital projects” or servicing the debt on such projects, which can include anything from public utility lines to a sports facility. The local sales tax would therefore only last as long as necessary to pay for the approved capital project – but in some cases that could mean up to 10 years.

If approved by the Senate, the constitutional amendment will appear on the 2016 general election ballot. If voters approve the amendment, localities could begin the process of implementing a local option sales tax starting in January 2017. Cities and counties could then put sales tax proposals before local voters beginning with the November 2018 general election.

Despite the support of a solid majority of the Kentucky House and Gov. Steve Beshear, the local option sales tax’s future remains unclear in the state senate. Because a constitutional amendment is involved, a three-fifths majority of the 38 senators must vote in favor of the House’s proposals. Senate President Robert Stivers told the media he personally supports the local option tax but was unsure how the majority of his Republican caucus would vote.

The local option tax has muddled traditional party lines. In the Democratic-controlled House, the Republican leadership supported the local option tax. But many Democratic lawmakers spoke out against the measures, criticizing them as imposing a “regressive” tax on poorer Kentuckians. Likewise, several Republican candidates hoping to run against Gov. Beshear, a Democrat, in this November’s election, denounced the measures as an unwarranted tax increase. Supporters reply they only want to give local governments the option of using the sales tax to raise funds, and that voters would retain the final say.

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog Bonham’s Cases.

Michigan voters to consider a statewide sales tax increase

Michigan voters will head to the polls on May 5 to approve (or reject) a proposed 1% increase in the statewide sales tax. Last December, Michigan Gov. Rick Snyder and the state’s legislature agreed to the referendum as part of a package to fund transportation and educational programs. If approved, Michigan would have a statewide sales tax of 7%, which would tie it with several states for second-highest in the country.

1% Michigan sales tax hike proposed

Michigan Gov. Rick Snyder and the state’s legislature have proposed a 1% statewide sales tax increase as part of a package to fund transportation and educational programs.

The referendum is necessary because the sales tax is written into the Michigan Constitution. Voters must approve any constitutional amendments proposed by the legislature. Michigan’s 1963 Constitution originally set the sales tax at 4%. In 1994, an amendment imposed an additional 2% tax, with the proceeds directed to the state’s public schools. The Constitution also exempts prescription drugs and groceries from the sales tax. If the referendum passes, sales of gasoline and diesel fuel will also be exempt from sales tax (although other gas taxes would increase).

A report commissioned by the Michigan legislature estimated raising the sales tax from 6% to 7% will generate about $1.6 billion in additional annual revenues. Most of this new revenue will go to roads and mass transit. Michigan schools are expected to receive an additional $300 million.

Who will win the campaign?

The referendum has sparked a spirited campaign among both supporters and opponents. A group called Protect MI Taxpayers emerged last December to rally opponents under the slogan “Stop Government Pickpocketing!” Since then, at least three other opposition groups have formed, according to the Detroit News, including Citizens Against Middle Class Tax Increases, the Coalition Against Higher Taxes and Special Interest Deals, and Concerned Taxpayers of Michigan.

On the flip side, a group called Safe Roads Yes is leading supporters of the referendum, officially known as Proposal 1. Established groups backing Proposal 1 include the Small Business Association of Michigan and the Michigan Infrastructure & Transportation Association, the trade association that represents the state’s road construction companies.

Political analysts estimate the total cost of the referendum campaign may exceed $15 million. EPIC-MRA, a Michigan-based polling firm, conducted a survey of 600 Michigan voters in late January on Proposal 1. In response to a question offering basic details of the sales tax increase, a slim plurality—46% to 41%—said they would vote for Proposal 1. However, when the pollsters provided more detailed information about Proposal 1, the “No” vote overtook the “Yes” side by a margin of 47% to 38%. EPIC-MRA noted its survey had a 4% margin of error. (It is unclear how much information voters will officially receive, as the Michigan Bureau of Elections has yet to approve final ballot language for Proposal 1.)

Ultimately, the success or failure of the referendum depends on who gets more of their supporters to the polls on May 5. Only 43% of Michigan voters turned out for last November’s statewide elections. And besides Proposal 1, the May 5 election only features contests for city and local offices, which are typically low-turnout affairs.

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog Bonham’s Cases.

Sales and use tax changes for December 2012

Angel Sauer

Angel Sauer, sales tax research team leader

Sales and/or use tax rates in the states of Alabama, Arizona, Oklahoma, and Tennessee have changed in Zip2Tax products effective Dec. 1, 2012.

In Alabama, tax rates changed in the city of Mobile.

In Arizona, tax rates changed for the city of Glendale.

In Oklahoma, tax rates changed for the city of Locust Grove.

In Tennessee , rates changed for the city of Millington.

There were 32 states with ZIP code changes effective after November 2012 including Alaska, Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Kansas, Massachusetts, Maryland, Maine, Michigan, Minnesota, Missouri, Mississippi, North Carolina, New Jersey, New Mexico, Nevada, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Texas, Utah, Virginia, Wisconsin, and West
Virginia.

Download a complete list of the ZIP code changes.

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