Republicans propose using sales tax money for new tax cuts

A U.S. Supreme Court ruling making it easier to collect online sales taxes could yield billions of dollars for state and local governments — if they decide to keep it.

Posted: Jun 30, 2018 11:11 PM

JEFFERSON CITY, Mo. (AP) — A U.S. Supreme Court ruling making it easier to collect online sales taxes could yield billions of dollars for state and local governments — if they decide to keep it.

Rather than spend the windfall on schools, prisons or other government services, some Republican governors and lawmakers are proposing to give it away in the form of tax cuts.

Wisconsin Gov. Scott Walker, running for re-election this year, has suggested the extra revenue could be used to expand tax breaks for seniors or households with children. Nebraska Gov. Pete Ricketts, also on the November ballot, wants to put it toward property tax relief.

Some Kansas lawmakers are eyeing a reduction in the food sales tax; the Tennessee House speaker wants to lower the state's 7 percent sales tax rate; and a Missouri lawmaker plans to sponsor an individual income tax reduction to negate the sales tax expansion.

"To just take that revenue would be a tax increase," said Missouri Sen. Andrew Koenig, echoing the reasoning of many tax-adverse Republicans leery of simply spending or saving the expected influx.

The court ruled June 21 that South Dakota could enforce a law compelling many out-of-state businesses to collect taxes on sales made to its residents. The ruling overturned a decades-old precedent stating that businesses without a physical presence in a state — like a store, office or warehouse — didn't have to collect sales taxes on behalf of the state. In such cases, customers technically were responsible for paying the tax, but most didn't.

As online commerce has grown, some large retailers such as Amazon already had begun collecting sales taxes for all 45 states that charge them. But others with a physical presence in only a few places haven't been doing so.

How quickly that will change could vary by state. In the past two years, 15 states have enacted laws attempting to require out-of-state companies to collect sales taxes, according to the National Conference of State Legislatures.

Many other states may have to wait until legislatures reconvene in 2019 to set specific requirements for out-of-state sellers. Most states already have set their budgets for the 2019 fiscal year.

State and local governments stand to gain $8 billion to $13 billion annually by collecting taxes from all remote sellers, according to a report issued last fall by the Government Accountability Office. Other estimates have been even higher.

Most states will see revenue gains equaling 1 percent to 2 percent of their total state tax collections, though states that rely more on sales taxes instead of income taxes could gain more, said Moody's Investors Service.

In Tennessee, which ranks high in sales tax reliance, Republican legislative leaders already are discussing ways to offset the anticipated surge in revenue with a new tax reduction.

"I think it's an opportunity for us to do something that I've wanted to do for some time now, which is lower our sales tax" rate, House Speaker Beth Harwell, who is running for governor, said during a recent candidate debate.

Tennessee's Democratic gubernatorial candidates suggested the money could go toward higher pay for public school teachers.

How states decide to use sales tax revenue may depend on their overall financial situation and could be complicated by varying estimates of how much to expect, said Howard Gleckman, a senior fellow at the nonpartisan Tax Policy Center.

"The amount of money is uncertain, and that would suggest states would want to be a little careful before they go and spend it," he said.

Mississippi Gov. Phil Bryant, a Republican, has said he will ask lawmakers to earmark the extra revenue for transportation.

In Kansas, lawmakers also may face pressure to use at least part of the money to comply with a court order to boost school funding, said House Taxation Committee Chairman Rep. Steven Johnson, a Republican.

In neighboring Missouri, however, the Supreme Court ruling could provide justification to continue a tax-cutting spree. A corporate income tax cut was signed into law in June. Legislation deepening an already planned individual income tax cut is pending before the governor. And Koenig said he will sponsor a bill during the 2019 session to use the online sales tax collections to offset yet another proposed cut to the individual income tax rate.

In some states, the ruling could lead to automatic tax cuts.

A 2016 South Dakota law raising the sales tax rate from 4 percent to 4.5 percent requires it to be scaled back by one-tenth of a percent for every additional $20 million the state reaps, if it's able to collect from out-of-state online retailers. The rollback is likely to be a top issue next legislative session. Though a Democratic senator wants to use the money to reduce food sales taxes, Republican Sen. Jeff Partridge, who sponsored the provision, said his goal remains to "give the money back to the people."

A 2013 Wisconsin law mandates an equal cut in state income taxes if federal law requires the collection of online sales tax. Walker said his administration is examining whether the Supreme court ruling triggers that provision.

"One way or the other," Walker said, "we'd want to get that back to the hardworking taxpayers."

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 250869

Reported Deaths: 5481
CountyCasesDeaths
DeSoto16841171
Hinds15890312
Harrison13037191
Rankin10439205
Jackson10128177
Lee8721135
Madison8071160
Jones6166108
Forrest5870117
Lauderdale5724177
Lowndes5238109
Lafayette486192
Lamar475363
Washington4734122
Bolivar3941106
Oktibbeha388179
Panola360475
Pontotoc358752
Monroe3487103
Warren337895
Union337457
Marshall336065
Neshoba3325150
Pearl River319492
Leflore2980104
Lincoln293385
Sunflower277569
Tate266659
Alcorn260651
Itawamba258858
Pike258176
Hancock253557
Prentiss242450
Scott241043
Yazoo237754
Copiah237449
Tippah236246
Simpson232367
Leake227864
Coahoma223154
Grenada215770
Covington208871
Marion206171
Adams201666
Winston198061
George197438
Wayne196130
Attala191658
Newton186542
Chickasaw181243
Tishomingo179659
Holmes167867
Jasper165134
Clay156732
Stone140218
Tallahatchie138234
Clarke136460
Calhoun133321
Smith118823
Yalobusha113834
Walthall111136
Noxubee109622
Greene108929
Montgomery108134
Carroll103721
Lawrence101217
Perry99131
Amite96425
Webster90624
Claiborne85125
Tunica84521
Jefferson Davis83825
Humphreys81524
Benton80323
Kemper75720
Quitman6758
Franklin65315
Choctaw59613
Wilkinson58125
Jefferson53019
Sharkey42417
Issaquena1586
Unassigned00

Alabama Coronavirus Cases

Cases: 417528

Reported Deaths: 6030
CountyCasesDeaths
Jefferson61313888
Mobile29768542
Madison26637185
Tuscaloosa20580268
Montgomery18696304
Shelby18310113
Baldwin16002179
Lee12261101
Morgan12093112
Etowah11604157
Calhoun10982200
Marshall10108107
Houston8474129
Cullman7960104
Limestone790174
Elmore7723101
DeKalb764697
St. Clair7460120
Lauderdale745183
Talladega6102108
Walker5852174
Jackson574441
Blount526483
Colbert525670
Autauga510355
Coffee434256
Dale391081
Franklin363445
Chilton333565
Covington326167
Russell323810
Escambia312442
Dallas300296
Clarke278233
Chambers277869
Tallapoosa2599107
Pike245829
Marion240549
Lawrence240447
Winston223835
Bibb213047
Geneva197431
Marengo197329
Pickens195231
Hale173742
Barbour171236
Butler167958
Fayette166026
Cherokee159630
Henry151119
Monroe144417
Randolph138535
Washington136526
Clay125246
Crenshaw118044
Lamar116619
Cleburne116023
Macon113335
Lowndes108735
Wilcox101221
Bullock98128
Perry95419
Conecuh92920
Sumter88726
Greene75323
Coosa60414
Choctaw51224
Out of AL00
Unassigned00
Tupelo
Partly Cloudy
36° wxIcon
Hi: 55° Lo: 32°
Feels Like: 36°
Columbus
Partly Cloudy
34° wxIcon
Hi: 57° Lo: 31°
Feels Like: 29°
Oxford
Cloudy
32° wxIcon
Hi: 52° Lo: 31°
Feels Like: 32°
Starkville
Partly Cloudy
32° wxIcon
Hi: 55° Lo: 30°
Feels Like: 32°
WTVA Radar
WTVA Temperatures
WTVA Severe Weather