Top 5 silliest state tax hikes

Caroline May | Reporter

With states facing a collective $175 billion budget shortfall, legislatures across the country are proving the old aphorism, “necessity is the mother of invention” — even if that invention is as absurd as the “Shake Weight.”

The Daily Caller has compiled a list of the five silliest revenue raisers implemented and floated in the rush to raise money for state coffers. While some voters might be angry about the overspending that has brought about these tax hikes, the creativity is undeniable and, in a weak moment, almost impressive.

Without further ado, here are the five silliest state tax hikes:

If you own a vacation home in New York, consider yourself a resident

Don’t buy a vacation home in New York anytime soon. Last month, a New York court ruled that a New Canaan, Connecticut couple’s income is subject to New York state taxes because they own a vacation home on Long Island. Even though they visit the home only a few times a year, it will cost them an additional $1.06 million in taxes – merely because the court ruled that the home was inhabitable year-round.

The Wall Street Journal reports that this is an unprecedented ruling, but one that will not easily be overturned:

Under the recent ruling, this might change for many out-of-state residents who own vacation homes or apartments here. In effect, it reinterprets what counts as a permanent residence…”This is going to open up a Pandora’s box,” says Eric Kramer, a tax attorney in Uniondale, N.Y. “I don’t think anyone previously thought vacation homes would count as a permanent residence.”

In Colorado, a steep tax increase on bull semen

In an effort to close the $2.2 billion budget shortfall, Colorado passed legislation last year to levy a 2.9 percent sales tax on candy, soda, software, direct mail “nonessential” food items purchased by restaurants (like napkins and plastic silverware), agricultural compounds like bull semen, and online sales.

During the November elections, the state House flipped to a Republican majority for the first time in six years. The GOP now has legislation in the works to repeal some of the taxes imposed by their more liberal brethren last year.

California Internet sales

In January, Democratic Berkeley Assemblywoman Nancy Skinner introduced a bill to require that all online out-of-state retailers collect state sales taxes for purchases sold in California. Skinner estimates that the tax will generate an extra $300 million for the cash-strapped state.

While the assemblywoman believes the tax will be a boon for government’s coffers, low tax advocates say, “not so fast.” In-state affiliates who receive commissions from sites they link to, like Amazon.com, will likely lose their deals with big merchants.

According to Patrick Gleason of the Americans for Tax Reform and Kelly Cobb of the Digital Liberty Project, states (like North Carolina and Rhode Island) that already have enacted taxes on online “affiliates” have generated no additional revenue

“The affiliate tax has hurt Rhode Island businesses and stifled their growth, as they’ve been shut out of some of the world’s largest marketplaces, and should be repealed immediately,” said former Rhode Island Democratic General Treasurer Frank T. Caprio.

You’ve heard of a sales tax? How about a sex tax?

Since legalizing prostitution in select counties in Nevada over thirty years ago, the state considered taxing sex for the first time to help close their $2.8 billion revenue gap. The bill proposed would have levied a $5 customer service tax on various sex acts.

“I don’t know why people won’t recognize that we have a legal industry,” said Democratic state Sen. Bob Coffin, who estimates that the measure could bring in $2 million in additional revenue if enacted. “I’m willing to go in and do the dirty work if no one else will.”

Coffin’s novel idea was defeated, however, in a 4-3 state Senate committee vote.

SUV tax in Texas

Everything is bigger in Texas, well at least until they start levying taxes on big cars. State officials in the long horn state are reportedly considering imposing a $100 surcharge on vehicles that do not meet federal fuel efficiency standards. It is estimated that such a charge could amount to $115.3 million in revenue for the state.

Opponents of the tax, however, argue that those driving big cars already pay more than their share in gas tax money and that it is unfair to tax them further.

“If you don’t get as good mileage, you buy more gas,” said Bill Wolters, president of the Texas Automobile Dealers Association. “The sale of motor vehicles is a great revenue source for Texas. It’s counterproductive to add a surcharge.”

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