Initial Carbon Tax, Other Tax Increases Pass House

On Wednesday, the House passed the first version of a carbon tax in H.439, which increases the tax on the retail sale of heating oil, propane, kerosene, and other dyed diesel fuel delivered to a residence or business from $0.2 to $0.4, and increases the tax on the retail sale of natural gas from 0.75% to 1% and that on coal from 0.75% to 1.5%.  A floor amendment was approved to exempt farm and forestry operations from the tax on dyed diesel fuel.  The bill is now in the Senate.  These increase are expected to total some $4.6 million.  To review the bill as passed by the House, click here.

Separately, the House passed a general tax bill, H.541, today.  This bill would generate an additional $7.65 million:  $4.5 million in General Fund revenues, $930,000 in Education Fund revenues, and $2.22 million in other special fund revenues.

Highlights of the bill include:

Capital Gains Exclusion.  Reduces percentage of the capital gains exclusion from 40% of certain assets to either 30%, or a total gain amount of $450,000.00, whichever is less.

Estate tax.  Increases the state exclusion from $2,750,000 to $5,000,000 by January 1, 2021.  Increases the exclusion in two steps: to $4,250,000 on January 1, 2020, and then to $5,000,000 on January 1, 2021.

Property Transfer Tax.  Changes the definitions to make it clear that the transfer of a controlling interest in a legal entity that holds real property triggers liability for the tax.  A controlling interest is 50 percent or more of the controlling stock or interest in the entity.  The tax is applied to value of the property held by the entity, apportioned to reflect the percentage of ownership interest that was transferred.  If more than one person is acting in concert, their interests are aggregated for the purpose of determining a controlling interest and their liability for the tax.

Land Gains Tax.  Changes definition of “land” so that the tax only applies to land that is purchased and subdivided in the six years prior to the sale or exchange.  If a sale or exchange of property is for land that falls outside of this definition, there is no obligation to file or withhold.

Fuel Tax.  Clarifies who the tax applies to in light of 2016 changes.  Extends the sunset on the tax for five years to 2024.

Health Information Technology.  Extends the current Health Claims Tax revenue devoted to the Health Information Technology Fund for an additional year, until July 1, 2020.

For other highlights, click here.