State Rundown 9/17: Virginia Gas Tax, Tesla's Sweetheart Deal


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TESLA1.jpgVirginia’s gasoline tax will increase by 45 percent on January 1, 2015 if Congress fails to pass a law (the Marketplace Fairness Act) granting states the power to collect sales tax on online purchases. The increase, passed by lawmakers as part of a 2013 transportation spending plan, will cost motorists about 5 more cents per gallon. Rep. Bob Goodlatte, a Virginia congressman and Chairman of the House Judiciary Committee, is responsible for holding up the internet sales tax legislation, allegedly due to the deep pockets of his tech company supporters. Goodlatte’s opponents have accused the congressman of backing the interests of his donors over those of his constituents.

The New York Times reports that Kansas Gov. Sam Brownback (R) faces a revolt from his base over the deep and painful tax cuts he pushed for two years ago. The article quotes staunch conservative voter Konrad Hastings: “[Brownback] is leading Kansas down. We’re going to be bankrupt in two or three years if we keep going his way.” The state’s projected budget shortfalls are in the hundreds of millions of dollars annually, and over 100 Republican state officials have endorsed Gov. Brownback’s challenger, Paul Davis (D).


Using ITEP data, financial services website Wallet Hub released its ranking of the most and least fair state tax systems of 2014. To rank the states, Wallet Hub conducted a national survey, which found that both liberals and conservatives believe a progressive tax system is most fair. Then they compared this against ITEP’s finding that the average local and state tax burden is hugely regressive. Washington took the prize as the least fair state using Wallet Hub’s methodology, while Texas and Florida had the dubious distinction of being states where the top 1 percent are most undertaxed while the bottom 20 percent are most overtaxed. Congrats, I guess?


Nevada has agreed to a $1.25 billion economic incentives package for Tesla Motors, which plans to build a high-tech battery factory outside Reno. The figure is more than double the $500 million Tesla CEO Elon Musk was asking for, and amounts to almost $200,000 per anticipated job created. The deal contains “clawbacks,” clauses that allow states to demand repayment of giveaways if the promised investment is not forthcoming, but experience shows that these clauses are rarely invoked. California Gov. Jerry Brown, who fought for the factory but resisted ponying up millions in incentives, noted that the deal would be good for his state anyway since Tesla Motors is still headquartered in Palo Alto.


 

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