As the political landscape heats up with the race for the presidency, Democratic nominee Kamala Harris has made a bold statement by endorsing Joe Biden’s tax proposals. According to The New York Times, Harris is throwing her weight behind Biden’s plan to generate $5 trillion in new revenue over the next decade through tax increases. These proposals include raising the corporate tax rate from 21 percent to 28 percent, increasing the top individual tax rate from 37 percent to 39.6 percent, and implementing a wealth tax targeting individuals with a net worth of at least $100 million.
But how would exempting tips from taxes impact states across the country? With both Harris and Republican nominee Donald Trump promising to waive taxes on tip income, the Tax Policy Center’s Nikki Harris and Lillian Hunter shed light on this pressing issue. Tipped workers represent varying proportions of each state’s labor force, and individual states have their own regulations for compensating these workers. In the event of a federal exemption, the 41 states with income taxes would need to deliberate whether to align with federal guidelines.
Shifting focus to New York State, there has been a surge in the demand for legal cannabis since its legalization in 2021. The Office of Cannabis Management revealed that sales surpassed the $260 million mark in the first half of the fiscal year. New York imposes a 13 percent sales tax on all cannabis products, leading to considerable tax revenues. A portion of these proceeds, including $5.9 million in upstate New York, $3.2 million in Long Island, and $4.5 million in New York City, has been distributed to local governments.
In Oklahoma, consumers are in for a pleasant surprise as the state plans to eliminate sales tax on groceries starting August 29. While local taxes will remain intact, the 4.5 percent state sales tax on groceries will be scrapped. However, certain items like prepared foods, pet food, toiletries, over-the-counter medications, and alcoholic beverages will still be subject to taxes. The Oklahoma Policy Institute estimates that a family earning $40,000 annually could save around $125 as a result of this change.
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