Taxing Tuesday: Talking Other Tax Issues
BBB goes to die in Senate? State tax issues - Connecticut, New York, and Illinois!
I swear, there are OTHER tax issues than the frickin’ SALT cap. Also, it may be that the BBB is dead in the water in the Senate, so let’s just talk taxes in general.
As you can see, I don’t post about taxes every week… I do have other things going on. But let’s just pull the stories that have popped up.
BBB in Senate: Dead or Alive?
So the BBB (Big Bowl of Barf, oh sorry, Big Beautiful Bill) got through the House by the skin of its teeth since my last Taxing Tuesday post. It’s now in the Senate, and it’s questionable where it goes from there.
2 June 2025, MishTalk: Senators Ron Johnson and Rand Paul Say No to One Big Beautiful Bill
It takes four senators to block the bill, and there are four threats.
Ron Johnson’s and Rand Paul’s Red Lines
The Wall Street Journal comments GOP Senator Draws Red Line on Trump Megabill
….
There’s also Rick Scott (R-Fla) and Mike Lee (R-Utah). That said, they are likely to be “bought off” with something.
Here’s the White House’s sell job: 50 Wins in the One Big Beautiful Bill
I’m not quoting that grab-bag of stuff right now. You can follow that link.
In passing, a comment from Elon Musk:
That’s one man’s opinion.
Look, it is crammed with a bunch of crap. That should take us back to the “good ole days”, when there was a bunch of disparate crap in these bills.
It would be nice to have some kind of principled reform… but, frankly, that time is not coming this year.
During the Trump administration at all…. who knows?
Other BBB coverage:
29 May 2025, USA Today, Sean Williams: President Donald Trump's 'One, Big, Beautiful Bill' breaks a key Social Security promise - this is about taxes on Social Security benefits… I should come back to that another time
3 Jun 2025, Reason, Eric Boehm: It's Rand Paul and Elon Musk vs. Donald Trump Over the 'Big Beautiful Bill'
29 May 2025, Semafor: Ron Johnson takes on Trump’s ‘big, beautiful bill’
2 Jun 2025, The Hill: Trump’s ‘big, beautiful bill’ heads for showdown with Senate parliamentarian
2 Jun 2025, The Hill, Tobias Burns: ‘Donors’ vs ‘takers’: SALT battle stirs debate between blue and red states … yeah, this doesn’t have to do with BBB directly, but this is the sole SALT item I’m allowing today. I find this particular argument tedious. The “states” don’t own the federal taxes. How about we go to SALT cap zero? Then it’s irrelevant! (all go silent)
State Tax Issues: Illinois, New York, and Connecticut
Hey! States are having tax-setting issues, did you know?
Yes, I know with Trump around, he sucks all the media oxygen out of the room, but let us look at other things. For once, I will allow Illinois into the post, rather than sequester into its own post.
Illinois: Trying to Sneak in Taxes Under Shadow
There has been sneaky behavior in Illinois of late.
(what is new)
From Jane the Actuary:
Sorry, clicking on that triangle won’t make a video play — it will take you over to X, and you can play the video there. That was from 31 May 2025.
27 May 2025, Illinois Policy: Only 4 states tax services by default, but Illinois may join them
Adding sales taxes to services is limited in the U.S., with 46 states not generally taxing services. Illinois may break from the pack and start adding sales taxes to haircuts, lawn care, car repair and a long list of other service expected to cost $2.7 billion.
Sales taxes are usually applied to goods, not services, but Illinois state lawmakers are currently considering joining the four states that do tax services – a move that could cost Illinoisans $2.7 billion.
Five states charge no sales tax, 41 charge sales taxes on goods and just four tax services by default. Illinois is among the states taxing specific services, 29 of them in Illinois such as software downloads, vehicle leases and photo finishing.
….
Illinoisans already pay the nation’s 7th highest combined state and local sales taxes. If sales taxes are applied to the 83 services being targeted, or all services with specific exemptions, Illinoisans would pay taxes on:
Netflix and streaming services.
Rideshare services such as Uber and Lyft.
Gym memberships.
Barbershops and beauty salons.
Car washes and car repair.
Plumbing, electrical and other repair.
Lawn care and landscaping.
Members of the Illinois General Assembly said their Democratic peers are in stealth mode trying to pass the massive tax increase before adjournment May 31. They are claiming the money is needed to solve Chicago’s Regional Transit Authority fiscal crisis.
The issue, of course, is Illinois is deep in debt, in terms of not only pensions (though that’s a huge problem), but also just trying to cover current cash flow.
That’s a big problem.
But that was before the tax/spending bill (oh, the budget bill) passed.
This is what passed: 1 Jun 2025, ABC7: Illinois lawmakers pass $55.2B budget with new taxes, immigrant health cuts, no transit funding
The GOP also took issue with the tax increases, although the measure did not raise or create new sales, income or service taxes.
Instead, the measures expand state taxes on foreign and out-of-state income for businesses, raise tax rates on tobacco, vapes and sports gambling, and sweep fund balances from several lesser-known and utilized state funds.
….
Another spate of tax increases included in a transit governance overhaul bill surfaced late but sputtered. The failed measure would have added a $1.50 fee on food and package deliveries and taxed electric vehicle charging statewide among other changes. Talks on that bill could resume later this year.
Republicans and government watchdog groups are criticizing the lack of transparency of a 3,000-plus page bill that was not introduced until just hours before it was voted on.
….
The revenue bill creates a tax of 25 cents per wager for a sports betting licensee's first 20,000 wagers accepted, and 50 cents per wager after that.
Consumers will also see new taxes on tobacco products. The tax rate will rise to 45% from 36%. Vape products and nicotine pouches would also now be included under the tax.
The revenue plan amends state law to tax sales from all businesses that transact in the state, rather than only businesses with a physical presence in Illinois. The plan also eliminates a "safe harbor" exemption for businesses that move money outside the state.
Businesses that move profits to other countries would also be subject to the state's corporate income tax. The federal government currently taxes half of income moved offshore and Illinois would tax the other half under the revenue plan.
Businesses outside Illinois that sell $100,000 or more to people in the state must also collect Illinois sales taxes even if the business doesn't have a physical location in Illinois. This would apply to businesses like Amazon.
So, there are increases in sin taxes (tobacco, gambling, vaping), which will likely not give them much. Then there’s the attempt to expand sales taxes collections, which other states have done.
I’m wondering if they will get the $2.7 billion they estimate.
New York: Bribe Us With Our Own Money
This is just stupid.
On Sunday, I got an email from Gov. Hochul(‘s PR folks) — here is an excerpt:
Ah, “Inflation Refund Checks” — made out to “Middle Class New Yorkers”. For $400.
With the memo line saying “First-Ever Inflation Refund”.
Uh-huh.
Because that’s how that works.
Look, if I manage to get a non-zero check, I’m cashing it. (I just got one today, a refund for Stu’s truck’s registration renewal. Thanks, New York!) I did this with the COVID checks, because I knew I’d be paying taxes later anyway.
The “Learn if you’re eligible” link goes here: Inflation refund checks
Ah, they’re smart - not dependent on tax year 2024, as so many people will be putting off filing for 2024 til October 2025. Fine, fine.
Hey, I’ll take $300!
But… you know, that really doesn’t cut into the hit that inflation hits people. This is a bit silly.
Oh, and we’re getting the money in mid-October! If we were having any important elections this year, I’d be suspicious.
Connecticut: Trying to Write a 2-Year Bill, When This Year is Uncertain
Yes, this is personal.
I work “in Connecticut”. Look, don’t argue with me unless you’re a tax lawyer, and even then, pay me an hourly rate. (No, I’m not a tax lawyer. But my time is worth something.)
Anyway, CT gets a lot of taxes out of my flesh. And they’re still arguing on their next budget bill.
A big problem is that, like Texas, they do two-year budget bills.
3 Jun 2025, CT Mirror, Keith Phaneuf: Lamont seeks last-minute cut to hospital tax plan
Gov. Ned Lamont has asked legislators to scale back a $375 million hospital tax increase in the next state budget after industry officials raised concerns Tuesday morning.
This creates a technical challenge for legislators who entered Tuesday halfway through their formal adoption of a $55.8 billion budget for the next two fiscal years. The House approved that plan minutes after midnight, but the Senate hadn’t begun its debate by early Tuesday afternoon.
Lamont’s budget spokesman, Chris Collibee, said shortly before noon that the administration now wants to impose a $285 million tax hike on hospitals in the 2026-27 fiscal year, $90 million less the hike lawmakers and the administration had negotiated last week.
Connecticut has some severe problems, and part of the problems boil down to being full of both very rich and very poor people.
And promising things to both of these groups.
Since 2011, Connecticut has levied a provider tax that collects hundreds of millions annually from hospitals then redistributes those funds, plus more, back to the industry. Those return payments technically count as public health care spending and help Connecticut qualify for federal Medicaid grants, ensuring the state comes out ahead as well.
You see?
One of the big problems is that they were depending on federal redistribution programs - the ones called Medicaid and Medicare - would behave in certain ways.
But if they don’t behave that way, many of the shorter-term institutions, in terms of finance, can run into crisis.
They’re trying to write a bill for the next two years, when they don’t know how the federal policy will shake out.
Well. I have some thoughts on that.
MAYBE, if your situation is contingent on federal choices… MAYBE you cannot do a two-year plan.
Maybe reflect reality rather than pretend. If the redistribution is that dependent on federal policy, then maybe you’re going to have to bring people back to re-write the plan once federal policy has been determined. You’re not going to be able to set it.
Recommended Tax/Finance Reads
I want to leave you with my top Tax/Finance reads:
GovMoneyNews from Bill Bergman, who I’ve been following since his Truth in Accounting days (we go waaaay back)
Long Story Short from Liz Farmer, who I’ve been following since her Governing days (also way way back)
Known Unknowns from Allison Schrager
I read far more than these, but these are some of my top destinations in general. I have a lot of local-specific sites for Illinois (because I like beating up on them), Connecticut (I pay a lot of taxes to them), and New York (I live here), too. But I’ll save those for later.