6 States Raising Taxes in 2018: HI, IL, KS, OR, SC, TN

[Keith and stuff]

6 States Raising Taxes in 2018
Will you have to part ways with more of your income next year?
Sean Williams
https://www.fool.com/taxes/2017/12/1...s-in-2018.aspx

Let's face it, no one enjoys preparing their taxes or complying with federal and state tax code each and every year. It's not hard to see why, either. The federal tax code was nearing 10.1 million words in length as of 2015, and it's gained an average of 144,500 words per year since 1955. If not for the assistance of tax software and tax professionals, preparing your taxes might otherwise take a really long time.

Nevertheless, we pay our taxes and are mindful of compliance because we know it keeps the lights on for the federal, state, and local governments. It also allows for jobs to be created and infrastructure to be built and maintained.

But in 2018, a few of those state governments will be requesting more from their residents. If you live in one of the following six states, now might be the time to prepare for a higher tax liability in the upcoming year.

HI
The top personal income tax rate and small business pass-though income tax rate are increasing from 8.25% to 11%. This is expected to be a 53 million dollar a year tax increase in 2018 alone.

Illinois

In terms of sweeping (and confusing) income tax reforms, Illinois just might take the cake among the three states set to increase income taxes in 2018.

Earlier this year, the Land of Lincoln passed a 32% increase to its individual income tax rate, from 3.75% to 4.95%. However, the increase was designed to be blended in during 2017 and enacted fully in 2018. In plainer terms, Illinois residents will pay 3.75% for the first half of the year on their earned income and 4.95% for the second half of 2017. Meanwhile, in 2018, they'll be paying a 4.95% in state income tax on their earned income. For a single filer earning about $40,000 in adjusted gross income (AGI), you're looking at an extra $480 out of pocket in 2018 compared to the previous rate.

Things will be a bit tougher for the well-to-do. Single filers making more than $250,000 in AGI, and couples filing jointly earning more than $500,000 in AGI, are losing their personal exemptions, the Illinois property tax credit, and credits related to paying private school tuition for elementary and high school, as noted by the Chicago Tribune.

[oyarde]

Hawaii , illinois , oregon no surprise . If I lived there I would expect it , yearly . Seems like Tennessee has the 10 percent sales tax . Kansas would be the only mild surprise on the list

[Zippyjuan]

Kansas tried cutting taxes to boost their economy. It didn't work and they deficit grew so they had to raise them back up again to try to repair the hole in their budget.
Conservative Republicans joined Democrats on the issue. President Reagan also signed large tax increases when his tax cuts caused the deficit to soar.

http://www.chicagotribune.com/news/n...607-story.html

Kansas Republicans raise taxes, rebuking their GOP governor's 'real live experiment' in conservative policy

Republicans in Kansas broke ranks with the state's conservative governor Wednesday night, voting to raise rates and put an end to a series of tax cuts. The GOP revolt is a defeat for Gov. Sam Brownback, who overhauled the state's tax system beginning in 2012, bringing down rates and causing repeated, severe budgetary shortfalls.

Kansas's legislature is overwhelmingly Republican, but moderate GOP lawmakers joined with Democrats, overriding Brownback's veto of a bill they'd already passed once that would raise taxes again by $1.2 billion over two years. Eighteen of the state's 31 GOP senators and 49 of the 85 Republican members of the House voted against the governor.

The legislation undoes the essential components of Brownback's reforms, which he famously described as part of a "real-live experiment" in conservative governance.

Brownback had reduced the number of brackets for the state's marginal rates on income from three to two. The legislature will restore the third bracket, increasing taxes on the state's wealthiest residents from 4.6 percent to 5.2 percent this year and 5.7 percent next year.

Marginal rates on less affluent Kansan households will increase as well, from 4.6 percent to 5.25 percent by next year for married taxpayers making between $30,000 and $60,000 a year and from 2.7 percent to 3.1 percent for those earning less than that.

The legislation also scraps a plan to bring those rates down even further in future years, one of Brownback's promises to conservative supporters.

Finally, the legislature eliminated a cut Brownback had put in place to help small businesses. Analysts said that the provision had become a loophole, as many Kansans were able to avoid paying taxes entirely by pretending to be small businesses.

Proponents have argued that reducing taxes will stimulate the economy. "We have worked hard in Kansas to move our tax policy to a pro-growth orientation," Brownback said in a statement on vetoing the legislation. "This bill undoes much of that progress. It will substantially damage job creation and leave our citizens poorer in the future."

Since 2012, however, the pace of economic expansion in Kansas has consistently lagged behind that of the rest of the country.

Last year, Kansas's gross domestic product increased just 0.2 percent, federal data show, compared with 1.6 percent nationally.

[Swordsmyth]

Kansas tried cutting taxes to boost their economy. It didn't work and they deficit grew so they had to raise them back up again to try to repair the hole in their budget.
Conservative Republicans joined Democrats on the issue. President Reagan also signed large tax increases when his tax cuts caused the deficit to soar.

http://www.chicagotribune.com/news/n...607-story.html

The National depression had nothing to do with it, right?

[r3volution 3.0]

Kansas tried cutting taxes to boost their economy. It didn't work and they deficit grew so they had to raise them back up again to try to repair the hole in their budget.

They didn't cut spending, did they?

[Zippyjuan]

They didn't cut spending, did they?

They did that too. Budget from 2012 (when the tax cuts were enacted): https://ballotpedia.org/Kansas_state_budget_(2011-2012)

The governor signed the $13.8 billion fiscal year 2012 budget into law on May 28, 2011.[2] The budget closed a shortfall of around $500 million by reducing overall spending 6.1 percent, with public school aid being reduced by 5.6 percent

To resolve that deficit, Governor Sam Brownback on his first day in office proposed an immediate spending freeze and eliminating eight state agencies, though he did not specify which agencies.[10] He also said the state could eliminate $750 million from its fiscal year 2012 budget while actually increasing the amount the state spent on K-12 education.[10] Gov. Brownback also planned to eliminate 2,000 state jobs, all of which were unfilled at the time of the announcement.

They were forced to make more cuts when the revenues didn't come in as projected.

[Zippyjuan]

https://www.cbpp.org/blog/timeline-5...x-cut-disaster

Kansas' Tax-Cut Disaster

Gov. Brownback signs tax cuts
MAY 22, 2012

Tax cuts implemented
JAN. 1, 2013

Revenues fall $700 million
STATE FISCAL YEAR 2013-14 (STARTS JULY 1, 2013)

Moody’s downgrades KS bonds
APRIL 2014

Standard & Poor’s downgrades KS bonds
AUGUST 2014

Gov. cuts school funding
FEB 2015

KS drains operating savings
EARLY 2015

Lawmakers jettison school funding formula
MARCH 2015

Schools close early in some districts
MAY 2015

Standard & Poor’s downgrades KS bonds again
JULY 2016

State general K-12 aid down 13% since 2008
SEPT. 2016

Job growth since tax cuts: KS 3.3%; US 8.4%
OCT 2016

Lawmakers vote to roll back tax cuts; Brownback vetoes
FEB 2017

KS Supreme Court: school funding too low
MARCH 2017
Budget gap now at least $900 million
MAY 2017
5th anniversary of signing. Lawmakers looking for solution.
MAY 22, 2017

Lawmakers enact bill reversing most of the tax cuts over Brownback veto
JUNE 6, 2017

[dannno]

Well I guess KS better raise their taxes to get their economy going, right zip??

[r3volution 3.0]

They did that too

So they did.



Not by much though

[Zippyjuan]

The National depression had nothing to do with it, right?

They cut taxes in 2012- long after the recession ended so yes, it had nothing to do with it.

[euphemia]

Yes, Governor Haslam pushed for the gas tax hike. He likely will not be reelected. He's from old-money Knoxville and is a turncoat. He was definitely not our choice, for sure. Because I live very close to work, the increase for me will be about $.40 a week.

[Swordsmyth]

They cut taxes in 2012- long after the recession ended so yes, it had nothing to do with it.

It NEVER ended.

[Keith and stuff]

From the article
https://www.fool.com/taxes/2017/12/1...s-in-2018.aspx

Kansas

The third state passing along income tax increases in 2018 is Kansas. Following an income tax cut to its residents earlier this decade, Kansas' legislature passed its largest tax increase in history this June. In July 2017, state income tax rates rose by 0.2% (2.7% to 2.9%) for those earning $30,000 or less, 0.3% (4.6% to 4.9%) for those making between $30,001 and $60,000, and 0.6% (4.6% to 5.2%) for folks making more than $60,000.

Beginning next year, these rates will rise once more. Those making $30,000 or less will see yet another 0.2% hike to 3.1%, while middle-income earners making $30,001 to $60,000 will absorb a 0.35% increase to 5.25%. Lastly, those making more than $60,000 will see their income tax rate jump 0.5% to 5.7%.

Still, Kansans are paying a lower income tax rate than they did between 1992 and 2012, and they'll see a handful of reinstated deductions, including the child care deduction, which returns in 2018.

Oregon

But the smorgasbord of tax increases for 2018 goes to Oregon. The passage of House Bill 2017 is expected to generate $5.3 billion via taxes and fees to tackle highway and bridge improvements and to reduce congestion on major highways over the next 10 years. It'll lift taxes and fees in a variety of ways.

For starters, Oregon is tacking on $0.04 per gallon to its motor fuel tax, pushing it to $0.34 a gallon from $0.30. The state has the option of adding $0.02 per gallon in 2019 and beyond, but additional hikes will depend on the results of state-agency studies.

Second, Oregon is hitting residents, along with nonresidents performing services in Oregon, with a 0.1% payroll tax increase. If employers fail to deduct and withhold the tax, the employer will be on the hook for the tax (and possibly penalties, if not paid).

Third, Oregon is introducing the nation's very first bicycle excise tax. Despite being known as a "green" state, the only thing green here is the $15 tax imposed on buyers of bicycles retailing for $200 or more with wheels of at least 26 inches in diameter.

Finally, a privilege tax of 0.5% is being implemented on the retail sales price of motor vehicles. While the dealer is responsible for this tax, don't be shocked if it gets passed along to consumers in the form of a higher sticker price.

I thought OR was supposed to be a bicycle friendly state? It appears to have the most anti-bicycle state government in the entire nation. Is it a progressive thing now to hate bikes?

[brushfire]

IL will tax you on your federal tax return, as though getting your money back, with zero interest, is somehow income.

[Krugminator2]

Kansas tried cutting taxes to boost their economy. It didn't work

They didn't really cut taxes in a meaningful way. Setting that aside, Kansas is not exactly Greece It is worth noting the following stats:

Unemployment Rate. 3.6% National Unemployment rate: 4.1%

Poverty Rate : 11.5% (10th lowest) National poverty rate: 14%

Fiscal Health: 32nd

It is always strange that Kansas is a hill leftists want to die on. My response to Kansas is New York, New Jersey, Massachusetts, Illinois, and California. Kansas ranks ahead of every one of those states in the three categories I listed. Game over. I win. If only blue states could fail like Kansas.