2012 August Budget & Tax News

The intense political brawl that was the Wisconsin gubernatorial recall election came to a quick and decisive end on the evening of June 5, with sitting Gov. Scott Walker retaining his seat by a margin of seven points.

Also in this issue:

• Wisconsin wasn’t the only place government unions took an election-day drubbing in June. Voters in two major California cities overwhelmingly approved cuts in future retirement perks for local government workers.

• California is facing a budget predicament worse than previously thought, and while the governor touts additional short-term fixes of tax hikes and spending cuts, others are calling for systemic reform.

• As Republican delegates in Maryland railed against a state income tax hike shortly before legislators approved it in mid-May, a lone freshman Democrat from one of the most liberal and affluent districts inside the Capitol Beltway got up to explain why she too could not vote for the taxes. “I believe this discriminates against two-income families with children at home,” said Del. Ariana Kelly, a Bethesda mom with two young children.

• After getting shut down in the Kansas Senate, resurrected, and debated for several months, major tax reform legislation has been signed into law by Gov. Sam Brownback. While much of the new tax cut law promotes sound tax policy--specifically broadening the bases and lowering the rates of individual income taxes--a new study by the Tax Foundation says other provisions of the law might be misguided, as they appear to favor some business structures over others.

• The practice of hedge fund managers being compensated through carried interest in investment partnerships has received a lot of attention from President Barack Obama and some in Congress. Multiple bills have been submitted to change the tax character of carried interest for hedge fund managers to ordinary income. The bills would produce little or no benefit to the government and add to the expense of running a business.