Republican legislators roll out tax cut bills

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Republican legislators are calling for business, and personal tax cuts as Delaware’s expected budget surplus nears the $1 billion.
Current plans call for the state to set aside the bulk of the surplus for a future economic downturn and an end to federal assistance.
A release from General Assembly Republicans noted that five bills had been proposed.
The Caesar Rodney Institute (CRI) public policy group has become more closely allied with General Assembly Republicans earlier proposed personal and corporate tax cuts that seem to match those proposed in one piece of legislation.
Delaware has been the recipient of more than $1 billion in funding from federal coronavirus relief legislation. Also, state income tax revenues held up reasonably well during the pandemic due, in part, to legislation that included the Payroll Protection Program. The PPP is a potentially forgivable loan for employers that retained staff.
The legislation’s provision state that its funds cannot be used for tax relief or shoring up state pension funds is being challenged in court as states with Republican governors, and legislatures consider tax cuts.
CRI has argued that Delaware could simply tap the portion of the surplus that is not tied to federal funding.
Across the board tax cuts face an uphill battle in Dover since Democrats control the governor’s office and both houses. For Republicans, the proposals are a way to make taxes an issue in 2022 election races.
Democrats note that the current surplus results from the federal funds and, to a lesser extent, a decision to set aside money from previous budgets. Had the state been forced to pick up the impact of dealing with the virus, the surplus would have been a deficit.
Democrats have proposed some measures aimed at using the funds for education and other purposes.
One bill sponsored by state Rep. Rich Collins, R-Millsboro), the bill seeks an across-the-board 10% cut to the state personal income tax; would reduce the corporate income tax by nearly 30%; and cut the gross receipts tax by 50 percent.
The 10% percent income tax cut would amount to about $300 a year for a married couple making $70,000 a year or about $900 for a couple earning $210,000.
The gross receipts tax is a sales tax on businesses. It has long been criticized since some businesses do not have the ability to pass the cost on to the customer due to the deeper pockets of national companies that simply absorb the tax.
State Rep. Lyndon Yearick, R-Camden, sponsored bills that temporarily eliminate the state’s portion of the realty transfer tax for first-time homebuyers with lower incomes.
Yearick’s second bill would establish a low-income tax credit of $500 or $1,000 for a couple.
State Rep. Mike Ramone (R-Pike Creek) introduced a bill that would restore the $500 senior real property tax credit. Four years ago, the credit was cut to $400.
Ramone’s second proposal, House Bill 71, would decrease the realty transfer tax in Delaware by 25%. In 2017, the tax was effectively raised from 3% of the purchase price of a property to 4%.
“These bills are two initiatives that I have been relentlessly fighting for over the past few years,” Ramone said. “With an extraordinarily improved revenue picture this year, there should be no reason to delay implementation of either proposal.”
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