Soaring tax revenue and billions in pandemic aid from the federal government have left many states with the unusual problem of having too much money.
In Maryland, Republican Gov. Larry Hogan has long pushed for a, something he says will reduce the migration of people leaving the state to lower-tax places such as Florida when they’re finished working. He may finally have a window for striking a deal with the Democrat-controlled legislature.
The idea is appealing to retirees such as Karen Morgan, a lawyer who worked for the state legislature and lives in a Maryland suburb outside Washington, D.C. And most high-earners avoided layoffs during the pandemic and investors have done well — keeping income tax receipts high. Consumers have used that money to buy a lot of goods: home-office furniture, patio heaters, vehicles. That’s sent sales tax revenue, a key source of government income in most states, soaring.
A proposal in Republican-dominated Mississippi to phase out the personal income tax could drag down revenue enough to force cuts in state government spending in future years. The plan already has passed in the House, butIn addition to the income tax proposal, the House bill would reduce the taxes people pay each year to renew license plates for their vehicles and cut the sales tax on groceries. But the sales tax on most other items would rise from 7% to 8.5%.
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