Monday, February 8, 2010

States Try to Tax More Services as Coffers Deflate

http://online.wsj.com/article/SB10001424052748704829704575049861057266800.html?mod=WSJ_hpp_sections_news

One way or another they are going to take what they need from you to survive.

Will plumbers, lawyers and hot-air balloon operators be forced to pitch in to solve state and local government revenue shortfalls?

Sales taxes today mainly, though not exclusively, hit sales of tangible goods like cars and couches. Faced with the worst budget crisis in a generation, many states are looking to expand sales taxes to services, such as lawn care or accountants' advice. The goal, legislators say, is to broaden the tax base to cover a broader swath of the economy as traditional sources of tax revenue decline.

Although in early stages, service taxes are being considered by legislators around the country. In Kentucky, representatives have introduced a measure to extend sales taxes to some high-end services like limousines and balloon rides. In North Carolina, the legislature last year considered, but didn't pass, a proposal to tax services such as car repairs and lawn care.

In Maine, the legislature last year passed a law that would lower income taxes for most residents but extend sales taxes to services such as car repairs and dry cleaning. It faces a voter referendum in June.

Many states already tax some services