Advancing Sound Tax Policy with Katherine Loughead, pt 2
Hosts & Guests
Judy Vorndran, Partner, State and Local Tax
Meredith Smith, State and Local Tax Senior Manager
Katherine Loughead, Senior Policy Analyst at the Tax Foundation
What You Will Discover:
This week on the SALTovation podcast, we continue our conversation with Katherine Loughead, Senior Policy Analyst at the Tax Foundation, on various state and local tax issues. Katherine discusses the impact of the Tax Cuts and Jobs Act (TCJA), the trend of state tax reform and relief, and the challenges of tax policy in a complex political landscape. Katherine also touches on the importance of broadening tax bases and lowering rates, as well as the need for simplicity and transparency in tax laws.
Topics Discussed in this Episode:
- The TCJA eliminated the deduction for entertainment expenses and imposed limitations on state tax deductions, which has had a significant impact on high-tax states.
- Many states have been implementing income tax rate reductions in recent years to promote tax competitiveness and economic growth.
- New Mexico and South Dakota have broad sales tax bases, which has motivated them to reduce sales tax rates.
- The complexity and lack of transparency in tax laws can create challenges for businesses and taxpayers.
- There is a growing trend of states exploring new revenue sources, such as digital advertising taxes and wealth taxes, but it is important to consider the impact on economic growth and avoid picking winners and losers.
- “In an ideal world, if you want to really have an ideal tax system where you can create a lot of economic growth and have simplicity, you should do things this way. But it gets messy because politics is politics and so you have to work within that system and do the best you can. But we like to talk to lawmakers about how ideally tax codes should look like they were designed on purpose. But a lot of times people are coming in and out of the legislature and new governors have vastly different agendas.” -Katherine Loughead [01:37]
- “This has definitely been the biggest wave of state income tax reform and relief the U.S has ever seen. With so many states reducing their rates, and many times, not just once, but several states have come in and reduced their rates twice over the last three years, several times. A lot of them are prescribing future rate reductions and then when revenue continues to come in stronger than they expected, they’re able to then adjust those and bring rates down a little bit lower.” -Katherine Loughead [07:29]
[00:00:00] MEREDITH SMITH: Welcome to SALTovation. The SALTovation Show is a podcast series featuring the leading voices in salt, where we talk about the issues and strategies to help you make sense of state and local tax.
[00:00:14] Judy Vorndran: But didn't you think it was interesting in the tax act that we actually wrote that you could no longer deduct expenses for entertainment?
[00:00:21] Judy Vorndran: Like golf clubs and theater, and I'm like, why would we get rid of that? I thought that was very anti travel, you know, non travel, but you know, business expenses for the things that a lot of people expend. And then the whole, you know, limitation on state taxes is really insulting to New York and some of the very high tax states, where at least you got a little benefit for such a high tax.
[00:00:48] Judy Vorndran: Taxi environment at the federal level. Now that's gone. 10, 000 is nothing. Yeah, that was the spectrum of a high net worth individual.
[00:00:56] Katherine Loughead: That was actually one of the, you know, the [00:01:00] biggest, I think, stressors as part of the TCJA debate, at least from the inside. And, uh, it's, there was a lot of pressure, you know, about how.
[00:01:10] Katherine Loughead: Capping the SALT deduction would impact certain taxpayers in various states. And, you know, it is a little nice to be able to approach that debate now from kind of a think tank perspective where you can be a little more objective and you're not subject to the political pressures. But yeah, the, the political realities are.
[00:01:31] Katherine Loughead: real. And so that's something we, you know, we at the tax foundation have the privilege of being able to say in an ideal world, if you want to really have a, an ideal tax system where you can create. a lot of economic growth and have simplicity, you know, you should do things this way, but it gets messy because politics is politics.
[00:01:51] Katherine Loughead: And so you have to work within that system and do the best you can. But we like to talk to lawmakers about how ideally [00:02:00] tax codes should look like they were designed on purpose. But a lot of times, you know, People are coming in and out of the legislature. New governors have vastly different agendas. And so the tax code can really turn into, uh, you know, a bit of a, a bit of a mess after overtime.
[00:02:16] Katherine Loughead: And so period. Of course, we don't
[00:02:18] Judy Vorndran: have a supremacy cause claim coming after that for violating that clause of the constitution, because by delimiting the state tax deduction and some of the things that go from that, what we say, what is it? States that conform don't conform follow, you know, the federal IRC at a certain level You're basically overriding their supremacy by taking away some of the benefits that they have taking away a tax benefit.
[00:02:42] Judy Vorndran: That was Expected so i've surprised me. I haven't really seen any I don't know. I'm not a constitutional law Scholar, so I don't know but it just seems like that was the foundation of our nation I've really come to understand that as a state tax practitioner for 28 years. Like it was all based on us making our own decisions based on our population in [00:03:00] each state.
[00:03:00] Judy Vorndran: We did not want a king, right? And so this federal government overriding state decision making, that's kingdom, right? And so I'm surprised that some of that hasn't had more pushback. Well, I would
[00:03:10] MEREDITH SMITH: say, I think some of that though is the state's enacting like the PTET. And to the extent that they could, right, corporations can still deduct their taxes.
[00:03:23] MEREDITH SMITH: You know, that's not capped. And then the PTT, like who would have thought that, you know, states were going to kind of create this plan or this. You know, ideas such that if you are a member of a pass through, you can elect to kind of pay your shareholders taxes, take that deduction at the business level, and then that kind of, you know, by a matter of flowing through activity, kind of get some of that deduction.
[00:03:51] MEREDITH SMITH: So I don't know. I think that's kind of an interesting, creative way that states are, you know, deal with or kind of worked around [00:04:00] some of that, um, in a whole new tax structure, tax system.
[00:04:08] MEREDITH SMITH: And I think that's
[00:04:08] Katherine Loughead: interesting. Yeah, that's right. You know, states had to really respond to so many different provisions of this. And you know, from on the SALT deduction cap, I think, you know, there's the perspective you have. There's also kind of the perspective that, well, you know, the federal government.
[00:04:26] Katherine Loughead: Government for so long has been subsidized, subsidizing high taxes. And so now that that subsidy is limited, there's kind of been, I think, a real push for tax competitiveness.
[00:04:38] Judy Vorndran: Ah, that's a good point. I hadn't thought of it that way. I like that way of look, that is a great way of looking at it. Because small tax states or no tax states, from an income perspective, there's no
[00:04:47] Katherine Loughead: impact.
[00:04:48] Katherine Loughead: Right. I thought about that. And high tax states are feeling a little nervous and they're like, oh. You know, our taxpayers are really going to face the full burden of this now, and I think that has put some pressure on some state lawmakers [00:05:00] to look for ways to bring rates down or
[00:05:03] Judy Vorndran: But if you look at our population, the biggest high tax states are Texas, California, New York, Florida, Illinois.
[00:05:10] Judy Vorndran: Maybe, I think that's like 30%, I mean, 10 percent of the nation, is it up at 30 million humans though? I mean, I think those 30 million Does it? Because, you know, 10 percent of the nation is focused in a few states. The rest of people, Montana, South Dakota, less than a million humans, maybe two million. I mean, not even as Colorado where we live is like five, six million.
[00:05:33] Judy Vorndran: We're a baby state compared to some of our brethren. So they got a lot more to spend money on a lot more roads, a lot more infrastructure, a lot more. People to teach. So it's got to cost. I don't know. Do you get a benefit for the buck with more humans, but also because they're not all living together. So there's, you've got all these things, but I mean, I even think about we have a lot of mountains in Colorado.
[00:05:55] Judy Vorndran: Our, our properties have gone up like. One and a half times. It's been crazy. Denver [00:06:00] Metro, like Mayor said, 85%, but some of our mountain communities have gone up 150 percent from the valuation perspective. That's crazy. No, that just does not happen, but it's because of COVID. People are moving from high. cost states for itty bitty boxes to more space and land in the mountain community.
[00:06:19] Judy Vorndran: And so that's jacking the prices up because they're like, that's a deal. So, um, that disparity is really fascinating on how policy is affected. That's why California in particular doesn't conform to certain things because they're like kind of their own little nation and New York too, right? Florida is just kind in terms of, they're just a low tax mentality, mostly because a lot of New Yorkers moved there, I think.
[00:06:43] Judy Vorndran: Because it's no individual income tax. I don't know. I don't know. But you find a lot of New Yorkers retire to a lot of East Coasters. Why retire to Florida? Well, I'm kind of
[00:06:57] MEREDITH SMITH: on that. Um, in your June report, [00:07:00] the state tax reform and relief trend continues in 2023. Report article. You noted that 22 states cut their top marginal income tax rate since 2021.
[00:07:11] MEREDITH SMITH: So over the last couple of years, um, and that 23 marks the third consecutive year of substantial state tax reform relief. Why do you think so many rate? reductions are happening. Do you think that's part of that competitive kind of nature that we've been speaking
[00:07:29] Katherine Loughead: of? Yeah, absolutely. It's been really interesting because this has definitely been the biggest wave of state income tax reform and relief the US has ever seen with so many states reducing their rates and many times, not just once, but several states have come in and reduced their rates twice over the last.
[00:07:52] Katherine Loughead: So they are prescribing future rate reductions and then when revenue continues to come in stronger than they, you [00:08:00] know, expected. They're able to then adjust those and bring rates down a little bit lower. So yeah, that definitely has all been part of the desire to use this extra revenue that states by and large across the board.
[00:08:14] Katherine Loughead: Have had even California had. Like 90 billion surpluses,
[00:08:19] MEREDITH SMITH: right? So I think, you know, with the kind of trends that we were talking about in your article, there were a couple of specific states, New Mexico and South Dakota, I think that got identified and called out. So both of those states have kind of very wide sales tax bases.
[00:08:38] MEREDITH SMITH: They tax almost everything between the sales tax and the transaction privilege tax. I think that's what New Mexico's is. Do you, because of that, do you think they have incentive to continue to reduce kind of income tax rates? Or what do you think maybe those two specific states had, you know, motivation behind?
[00:08:58] MEREDITH SMITH: Yeah,
[00:08:58] Katherine Loughead: absolutely. You're [00:09:00] highlighting a really interesting trend because while we did see a ton of states enact income tax rate reductions, there were only a couple in New Mexico and South Dakota that enacted sales tax rate reductions and in South Dakota, that was really The obvious choice because they don't have an individual or corporate income tax.
[00:09:18] Katherine Loughead: So it's really the sales tax. That is the one that's impacting Consumers but also businesses alike because a lot of businesses have to pay sales taxes themselves on their business inputs Um, because sales tax bases often apply broadly, um, to more than just personal consumption. So New Mexico and South Dakota both have very broad sales tax bases, like you said, where they apply to more consumption than the average state.
[00:09:48] Katherine Loughead: And Hawaii is another one with a very, very broad sales tax base. And so that was part of the reason in those states that they really wanted to work on bringing that rate and reducing it. Uh, bringing it [00:10:00] down a bit. And so, you know, I think that, that's really interesting that it was the broad based taxes that they're really looking to bring the rates down on, whereas in the other states, it's really the income tax that is viewed as the most harmful to economic growth.
[00:10:19] Katherine Loughead: And so we're seeing that as being the tax that a lot of businesses and individuals care the most about. Because it is impacting their ability to reinvest in their business, hire more workers, you know, increase the wages of their existing workers, invest in new machinery and equipment. So that's the one that has the most impact on economic growth in a lot of states, as well as the corporate income tax.
[00:10:44] Katherine Loughead: There's a lot of economic literature showing it's the corporate income tax, then the individual income tax. And then sales taxes and then property taxes that have, um, the relatively worst impacts on state economic growth. And so that's why income [00:11:00] taxes were a big priority in most of these states. But, you know, I do think we have to start keeping more of an eye on the sales tax too because it is a major.
[00:11:09] Katherine Loughead: business tax, where in a lot of states, so many business transactions are being subject to the sales tax. And then oftentimes businesses do pass those costs along to their consumers in the form of higher prices or, you know, their employees in the form of lower wages. But that's happening non transparently where, you know, you see the cost of your good and you think that's just, you know, a little bit above what it would cost.
[00:11:36] Katherine Loughead: to produce the good, but you were not seeing the sales taxes that are embedded in those. But the more states are applying their sales taxes to B2B purchases, the more there's going to be those, uh, that tax pyramiding that occurs. So yeah, I think, you know, all of these taxes should be prioritized for finding ways.
[00:11:57] Katherine Loughead: to broaden bases [00:12:00] appropriately. And so we would view that for sales tax purposes as, you know, the retail sales tax should apply to all final personal consumption, including goods and services, but not business purchases because then it becomes far more than just a retail sales tax. So could talk about kind of this theory all day, but you probably have other things you want to talk about as well.
[00:12:20] Katherine Loughead: Well,
[00:12:20] Judy Vorndran: no, it's interesting because see the problem with the Wayfair law was because they didn't get the taxes from the B2C. See, so the B two B is where the money was from the audit perspective. You and I didn't get audited. My son, who is now 36, he said to me, mom, I buy it on Amazon 'cause they don't charge tax.
[00:12:35] Judy Vorndran: And I said, honey , you owe the use tax. He's like, what's that? Right? So we weren't getting all that Commerce tax wasn't going to the coffers of governments. Yeah, it's just, it's been a really interesting trajectory, especially given my age and what I've seen in this world of ours. And as we just keep seeing more and more, and I was just in Europe and everywhere I go, 18 percent to 20 percent every single invoice.
[00:12:59] Judy Vorndran: I buy a little [00:13:00] flag, you know, a little tchotchke, buy a t shirt. I'm like, Whoa, that's a lot of tax. And the only way to get that tax. You have to spend a thousand equivalent euros, I guess it was. And then you have to get the stamp and all this thing to get the money back. So of course you're not going to be bothered because who's spending that much at one fell swoop when you're just buying bits and pieces.
[00:13:18] Judy Vorndran: So, but they just seem to do it and not seem to think much of it. And it's really clearly enumerated on the receipt. Which I don't feel is good here. Like it'll have a tax, but I won't say Denver, Colorado, the County, the regional transportation, you know, the five jurisdictions that add up to that tax, it's just the gross number of tax.
[00:13:35] Judy Vorndran: So no one really knows. What taxes did I pay on what products go to your grocery store? Half the things aren't taxable, right? But toilet paper is feminine hygiene products might be the politics, but you know, I mean, they sell so many things I've done. I've worked with clients in the grocery business. I'm like nightmare for them to deal with all the take home food, the, you know, [00:14:00] the salad bar and.
[00:14:01] Judy Vorndran: The deli bar and then all the other things they sell aside from food. So that's a nightmare for them and selling that online. Give
[00:14:09] Katherine Loughead: me a break. You're right. There's so much complexity. There's so much non transparency too, where, you know, especially in wireless taxes, we have some but cell phone bills, they're in some cases like majority tax.
[00:14:24] Katherine Loughead: or a vast percentage of your monthly cell phone bill is taxes, but it's disguised in kind of weird lingo. You don't know what these acronyms are. Same with, you know, you know, rental car taxes, things like that. What is this going on?
[00:14:43] Judy Vorndran: Okay, so we have this really cute hotel called the Crawford Downtown. We redid our Union Station.
[00:14:47] Judy Vorndran: We named it after this woman named Dana Crawford, who did all this wonder renovation. She came from the East Coast, I think, and she's like, we should make these buildings awesome, make them something else. So the Crawford Hotel is a redo of our Union Station, which is really moribund, [00:15:00] honestly. So this is a beautiful hotel.
[00:15:01] Judy Vorndran: So my husband and I stayed there for our 20th wedding anniversary, kind of after it had opened a few, quite a few years ago. And I get my bill and I'm like, Oh my God, there's a 30 percent taxes on my room. I basically paid an extra room fee for the two, three nights we stayed. And I'm like, did I vote for that?
[00:15:18] Judy Vorndran: Cause that seems wrong. Cause we have to vote our taxes in Colorado. We have a table rule, but they buried it in these other fees, calling them taxes. I don't think they were taxes. I think they're like some kind of this fee or like a blah, blah, blah fee. And then. We allowed some certain things for cultural renovation.
[00:15:34] Judy Vorndran: Yes. We voted that in, but it was in addition to the lodging tax. I didn't have a car there. You know, we're just there. We didn't have all those ancillary things. We'd have to pay for wifi, but we have all these things. It was like 80 bucks all in, in taxes on a 300 a night. It was a lot. I was like, it equated to about 30 percent of the overall cost of our room.
[00:15:53] Judy Vorndran: So I was like, that was buried. They're making, that's profit. I bet. I'll for the, for the hotel. Well, kind
[00:15:59] MEREDITH SMITH: of an aside, [00:16:00]
[00:16:00] Judy Vorndran: we, I, I, we kind of know that to be true because we work with hotels and we know they kind of, you know, they're like, well, this little thing. And that way the room looks cheaper, but we
[00:16:08] MEREDITH SMITH: have this other, it's kind of a genius marketing ploy too.
[00:16:11] MEREDITH SMITH: Cause I. Before my daughter starts school, I take her and we go have like a little mommy and me kind of night in a hotel. And the last one we stayed in, there was a 30 resort fee, but you've got a 30 credit at the bar or the restaurant. And so what you're going to do though, it's like, it kind of washes, but at the same time, I'm going to go to the bar and I'm going to end up spending more money than my 30 allocation.
[00:16:36] MEREDITH SMITH: Plus it's going to incentivize me, my servers, my staff get tips. I was like, it's kind of genius.
[00:16:42] Katherine Loughead: Sneaky.
[00:16:42] Judy Vorndran: But how do you tax that? How do you tax that? I don't know. Is the question, right? Discounts and allowances. We're kind of thinking about that for our client, about the rebate and the discount, the allowance, and then rebates on LED lighting, like, aye, they're all different.
[00:16:55] Judy Vorndran: And so how do we apply that so we can make the checkout price a little bit lower because we know we're [00:17:00] going to apply for the rebate as a seller, crazy stuff you have to deal with when you're a retailer. And then I
[00:17:04] MEREDITH SMITH: think you get some of those outlier states, and I'm going to pick on Colorado Right, and this could be a transition into some of the newer things.
[00:17:14] MEREDITH SMITH: So Colorado, like Judy said, we have to vote in any sort of tax change. The state has a flat tax rate, it's one of the lower in the country. We, for the last two elections, reduced our income tax rate. So now as I think at four and a half mm-Hmm, , we were at 4.65 for a forever temporary rate reductions. We went to 4.55, and then I think we're at like four and a half or 4.45.
[00:17:37] MEREDITH SMITH: something like that. But in our cities, we almost always vote in a sales tax increase, right? So we vote to kind of tax our goods. And then obviously we're always, you know, tax marijuana, tax psilocybin, tax, you know, the, you know, kind of drug taxes. And then our property taxes are going up, but our income taxes went down and then we impose this delivery [00:18:00] fee, right?
[00:18:01] MEREDITH SMITH: That's not a
[00:18:02] Katherine Loughead: tax. Which is not a tax,
[00:18:04] MEREDITH SMITH: by the way. And so we are just kind of doing everything all over the place, right? Because we're, you know, and then you and we've, you know, still have wayfarer issues and, and all of that. So we get some of those kind of rogue states like ours that kind of don't follow process, right?
[00:18:27] MEREDITH SMITH: And then I think we did change. You know, we, a couple years ago, maybe last year, started taxing streaming, which, you know, that was kind of a sales tax expansion and that was at the state level. I think the cities had probably always taxed
[00:18:43] Judy Vorndran: it and they argued it was just the definition the whole time. And it was a clarification as opposed to an increase in tax.
[00:18:52] Judy Vorndran: So far, no lawsuits. That I know of.
[00:18:56] MEREDITH SMITH: You know, do you have any, in [00:19:00] kind of some of the states that you look at, any kind of like rogue, have you seen any kind of like rogue policies that people have come up with? You don't have to, you don't have to call out the state, but you're just like. That's bad, Paul.
[00:19:11] MEREDITH SMITH: Like, you just can't. Just don't. That's bad.
[00:19:15] Judy Vorndran: But they did.
[00:19:17] Katherine Loughead: There, there's lots of those. And I guess since you already called out Colorado, I will not do that myself. But yeah, they're, uh, they're kind of a big culprit with that where, you know, we love a lot of what they're trying to do on income taxes. And even the Democratic governor has said, you know, there really shouldn't be an income tax.
[00:19:37] Katherine Loughead: And he said he ideally would love to see it phased out, which that's very rare to hear from a Democratic lawmaker, but, you know, at the same time, Colorado is enacting all these so called fees, which, you know, that is to get around the taxpayers. Bill of Rights and a lot of things are being called a fee when really they are a tax.
[00:19:59] Katherine Loughead: It's not [00:20:00] the revenue isn't going to, you know, pay for the specific service that you are buying there. It's, you know, collected more generally to fund general state services.
[00:20:11] MEREDITH SMITH: So generally, right, like our transportation, it was in the transportation bill, the retail delivery fee was on the transportation
[00:20:16] Judy Vorndran: bill to help.
[00:20:17] Judy Vorndran: That's how we didn't even know that as practitioners because Department of Revenue didn't know about it because they had to enforce it and they didn't know what they're going to do. So they sat on it for a good year. Well, I'm sure they didn't sit on it, but they were trying to figure out how do we collect this thing?
[00:20:29] Judy Vorndran: Where do we do? We got to build a protocol in our Colorado Revenue line to add this extra thing for the remittance. process. I mean, legislators, they really don't understand what it takes to enforce these laws.
[00:20:42] Katherine Loughead: Right. Right. You know, that's, that's such a good point because they, you know, once you write the law, you can kind of just say, good luck trying to deal with this.
[00:20:51] Katherine Loughead: And so, you know, it really is important for businesses and other taxpayers to say, Hey, you know, this is way too complex. What's going on here? We don't, [00:21:00] we're trying to comply, but we don't even know where to start. So we have our
[00:21:03] Judy Vorndran: subsystem. I've been on this task force for the last six plus years advocating for just more simplicity for filing.
[00:21:09] Judy Vorndran: And I sit there with, we, we siphoned through legislators cause they might be term limiters or so forth. So educating them and they're thinking, well, there's technology and isn't it easy to do now? And I'm, isn't it like plug and play? And I'm like, no. So it's clear to me, you've never filled out a tax return, sales tax return, probably maybe not even an income because.
[00:21:26] Judy Vorndran: If you're at a certain economic level, you pay someone to do it, or you use, um, what is it? Go into it. TurboTax. Yeah. TurboTax. And you type your stuff in and it answers it. So you're not even really doing it yourself. You're using a product that's feeding you questions so you can give the information that you know.
[00:21:42] Judy Vorndran: So we don't really have people understand how, how to apply the tax law or how to fill the forms out. So there is a big disconnect from, you know, especially business. owners and the people who actually do the work and legislators and the people that enforce the policy. And I'm sure they try to weigh in on that because I [00:22:00] know they always get, you know, they get some feedback from departments and hey, you know, but at some point, if it's the will of the legislator, it gets
[00:22:07] Katherine Loughead: done.
[00:22:08] Katherine Loughead: Yeah. And oftentimes things happen super fast at the state level where a lot of legislative sessions are only two or three months long. So before you even know that something is. being considered, the decision might have already been made. And yeah, that's, that's a real.
[00:22:24] Judy Vorndran: Don't you think it's interesting that there's such a big hurry to make laws?
[00:22:27] Judy Vorndran: I mean, we've been a state for a hundred plus years. Why do we need new laws? Why can't we just get it right the first time? Like, I think, why is it such a hurry to make a law and promulgate it? Because I'm being on the task force, we need to create a law. And I'm thinking, but why? What if everything we have in place is good and it works?
[00:22:45] Judy Vorndran: Do we need to change it? So I find that really interesting and it kind of tells you it's not easy to govern. And it's not easy to solve the needs of the population. Look at our own families. We are not the same as families. I have [00:23:00] one very difficult dog and a very lovely dog, Sangree. Right?
[00:23:06] Katherine Loughead: So. Well, and I.
[00:23:08] Katherine Loughead: Yeah, it's a challenge. Well, and I
[00:23:09] MEREDITH SMITH: think as we wrap up, are there, are there policies that you all are watching out for that you think, you know, if you had a crystal ball. You know, what do you think would, kind of, where do you think tax policy is going over the next couple
[00:23:26] Katherine Loughead: years? Yeah, that's a really good question, and there are definitely some policies we're watching out for.
[00:23:36] Katherine Loughead: You know, with Maryland being the first in the nation state to adopt a digital advertising tax, that opened a huge can of worms, and those legal battles are still playing out, where it's a very complex Tax very vague. It's the first in the nation. It's It's kind of illy defined what exactly this is falling on.
[00:23:58] Katherine Loughead: It's hard to figure out [00:24:00] which transactions it actually applies to. Um, and then, you know, the, it's very likely constitutionally dubious. It's very likely unconstitutional, but at the, you know, it's still being collected. There's some open questions there. And so I, I know other states have introduced legislation to do similar things.
[00:24:22] Katherine Loughead: We've seen social media tax proposals and data tax. proposals, we're seeing wealth tax proposals and all kinds of different ways to try to grab revenue in new ways. I just think, you know, we would urge a lot of caution there and say, before we try to look at all these revenue source, like find new ways to 200.
[00:24:54] Katherine Loughead: And let's find ways to make those more competitive, uh, find ways to fix the tax [00:25:00] structure, to look at broadening bases, lowering rates so that there's more neutrality. And so you're not picking winners and losers as much because a lot of these newer taxes are really create, you know, picking winners and losers.
[00:25:11] Katherine Loughead: They're very narrow based, um, but high rate taxes, they're only targeting a specific industry or a certain subset of the population. But even when it comes to things like Um, some of the newer economy things to like delivery fees. You got to keep in mind that, you know, delivery or businesses that are delivering products, while that may be a newer business model to have things come directly to your door, these businesses are still paying income taxes and sales taxes and property taxes and gas taxes to deliver their goods where they need to go.
[00:25:44] Katherine Loughead: So there's kind of this perception that. If something's a new, like a gig economy thing, or a newer, um, newer technology, that it's not being taxed. And that's really a false perception where existing taxes really are being [00:26:00] applied. And what do we want to do? I think we. Want to continue to spark innovation and think about the ways that these new technologies and opportunities are making life a lot easier for a lot of us.
[00:26:12] Katherine Loughead: You know, I love being able to get a delivery within right away, you know, sometimes within a matter of hours. And so that
[00:26:19] Judy Vorndran: is amazing. Actually,
[00:26:21] Katherine Loughead: it is. And, you know, I don't think we want to penalize these activities. We want to raise revenues to fund government services that we all agree are important. But this, this desire to penalize certain industries.
[00:26:34] Katherine Loughead: That is what it is.
[00:26:34] Judy Vorndran: It's a punitive measure. I think, if you think back, fuel excise, uh, there's a ton of ad valorem taxes on the oil and gas and mining industries. They were punished because they were rooting the land or whatever the perception is. They got to clean up after themselves. They weren't cleaning up after themselves.
[00:26:50] Judy Vorndran: Those sorts of things. So I, I do. I think it's a little, it's policy driven as opposed to like tax smart driven. You know, so in New Mexico, uh, you know, [00:27:00] I've traveled to New Mexico, a state of 2 million humans. It's very close to Colorado. I went river rafting and I look at my receipt and I'm like, Oh my gosh, once again, 40, 50 in taxes on four people to get in a boat.
[00:27:12] Judy Vorndran: And I thought, Well, that doesn't seem right. I asked the owner. I'm like, what are you charging tax on? There is an environmental protection fee for the river. There's a, this fee for that. There were a bunch of fees in addition to just the pure tax. So then they have to collect as a person using the river.
[00:27:28] Judy Vorndran: So we pay that as a consumer. So there is so much of that. There's separate little policy taxes, especially at the state and local level. It is sad to see another one like the commerce tax in Nevada. I mean, you guys rooted against that. You were obviously not at the tax foundation at the time, but you had a very insightful article going through the reason why it was bad policy and nobody obviously listened to you, but it's okay.
[00:27:49] Judy Vorndran: We should try
[00:27:56] MEREDITH SMITH: it. Isn't that we do a.[00:28:00]
[00:28:01] MEREDITH SMITH: Some days we do it better than others, Catherine, it was, it was
[00:28:05] Judy Vorndran: just doing the best
[00:28:06] MEREDITH SMITH: we can. So we really appreciate your time. We really appreciate the work that you and the Tax Foundation do. And so if you are a listener, donate to the Tax Foundation, it's a 501c3, consult your tax advisor. on what that means to you.
[00:28:21] MEREDITH SMITH: Um, but again, thank you so much for being here. We really appreciate your time and your insight.
[00:28:26] Katherine Loughead: Thanks, Meredith. Meredith, it's been really great to be with you and appreciate it.
[00:28:31] MEREDITH SMITH: And that's another episode of Saltivation. Until next time, this podcast is for educational purposes only and is not intended nor should it be relied upon as legal tax accounting or investment advice to consult with a competent professional to discuss specifics of your situation and the applicability of the information presented.
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