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Wash. Legislature Will Reconvene to Vote on Boeing Construction Package

Avi Niman of StateTrack reports that Washington Gov. Jay Inslee (D) has called a special session of the state’s legislature, to convene Nov. 7. Lawmakers will consider approving a package of legislation that will enable the construction of the new 777X jetliner by The Boeing Company in Everett, Wash.

The proposed package includes tax incentives, education and workforce development, a transportation revenue package, streamlined permitting, and water quality solutions. Inslee has stated that ratification of this legislative package is crucial for the economic growth and development of jobs in the state.

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Internet Sales Tax Debate Rages in the States

Amazon.com began collecting the 6.25 percent state sales tax on any purchases by Massachusetts’ residents starting November 1. The tax revenue collected by the company will then be submitted to the state’s Department of Revenue.

Amazon.com agreed to collect the tax when it acquired Kiva Systems last year based in North Reading, Massachusetts. Amazon is now either collecting state sales tax or is expected to start for orders originating in 16 states: Arizona, California, Connecticut, Georgia, Indiana, Kansas, Kentucky, Massachusetts, New York, North Dakota, Pennsylvania, Texas, Virginia, Washington, West Virginia and Wisconsin. 

The main reason the company agreed to voluntarily collect online sales taxes in these states was directly due to the establishment of a physical presence in those states as Amazon.com has opened fulfillment warehouses, made acquisitions or agreed to keep in-state Amazon.com associates. Amazon.com simply dropped their sales affiliates in seven states where the company had no physical presence instead of collecting and remitting sales taxes including: Arkansas, Maine, Missouri, Minnesota, North Carolina, Rhode Island and Vermont.

The practice of taxing an out-of-state retailer for in-state sales was largely invalidated in the 1992 Supreme Court Ruling Quill Corp v. North Dakota. Since then, a new type of tax law, dubbed ‘affiliate nexus’ laws, have begun to take a new approach by taxing the sales of online retailers who do business through a third party located in the state. Typically, these third parties will link to a vendor’s website and are in turn compensated for any sales made through these types of referrals. If the amount of sales made through these referrals exceeds a certain threshold, typically $10,000, then all of the vendor’s sales made to consumers in that state become subject to state tax laws.

For example, Arkansas in 2011 enacted a law to require large e-commerce retailers to collect and remit state sales taxes if they generate more than $10,000 in sales a year through in-state sales affiliates. Connecticut requires e-commerce retailers to collect and remit state sales taxes if they generate more than $2,000 in sales a year through sales affiliates based in the state. A seller who enters into an agreement with a person in Maine, for a commission or other consideration, refers potential customers and has cumulative gross receipts from retail sales in excess of $10,000 must register with the tax assessor and collect and remit taxes. In Rhode Island, retailers that generate more than $5,000 in sales through sales affiliates based in the state must collect the tax. In response to these initiatives, Amazon has canceled affiliation agreements in many of the states that have enacted this type of law.

Meanwhile, the issue has been working its way through the courts. The Illinois Supreme Court on October 18 struck down an affiliate nexus law. The decision was a first, as courts in New York had previously upheld them. The Illinois court’s majority argued that there does not seem to be a difference between digitally linking customers and using means that are not taxed, like advertising promotional codes in print publications or radio broadcasts.

For years many state lawmakers have been hoping Congress would resolve the issue, but the current bill, The Marketplace Fairness Act, is stalled in the House. This bill would grant states the authority to compel online and catalog retailers, no matter where they are located, to collect sales tax at the time of a transaction. The bill would grant this authority only to states that have simplified their sales tax laws. Under this bill any online retailer with sales exceeding $1 million across all states would become subject to the same in-state taxes as brick and mortar operations. Notably, Amazon supports this bill but other online giants like eBay do not.

CBO: New Estimate on Raising Medicare Age Finds Much Less in Savings

By Emily Ethridge, CQ Roll Call

The Congressional Budget Office said Thursday that raising the Medicare eligibility age to 67 from 65 would save the government $19 billion over 10 years — less than one-fifth of previously estimated savings.

The significant drop in savings is primarily due to CBO’s new assessment that the people whose eligibility would be delayed would not have cost Medicare as much as previously projected because they are in better health or have other insurance coverage. In addition, many would qualify for Medicaid or for enrollment in a health insurance exchange, increasing costs in those programs.

The finding may affect how lawmakers evaluate changes to Medicare, especially as a budget conference committee meets and discusses changes to entitlement programs. House Budget Committee Chairman Paul D. Ryan, R-Wis., has included the concept in his budget proposals, and the idea also surfaced during negotiations over how to avoid the fiscal cliff in late 2012.

President Barack Obama entertained the idea of raising the eligibility age during debt limit negotiations in 2011, but many Democrats have said they would not support it.

In its analysis, CBO looked at raising the eligibility age by two months every year, beginning with people who were born in 1951, until the eligibility age reaches 67 for people born in 1962.

Doing so would reduce the deficit by $19.1 billion between 2016 and 2023, with no effect on the deficit in 2014 and 2015, the CBO found. That represents a net effect of a $23 billion decrease in outlays, and a $4 billion decrease in revenues over that period.

While spending on Medicare benefits would drop, those savings would be offset by increases in federal spending for Medicaid and on subsidies for consumers purchasing insurance through the health care law’s (PL 111-148, PL 111-152) insurance exchanges, as well as reduced revenues, the CBO said.

Many people who would have otherwise joined Medicare would instead get coverage through Medicaid or through the health insurance exchanges, which would increase spending for both those programs, the CBO found.

By 2023, spending on Medicare would be about 3 percent less under this option than it would be under current law, the CBO found. Medicare spending would be 4.7 percent of the gross domestic product, rather than 4.9 percent.

“CBO projects that roughly two-thirds of those long-term savings from this option would be offset by the increases in federal spending for Medicaid and exchange subsides and the reduction in revenues described above,” the office said.

As recently as January 2012, the CBO estimated that raising the eligibility age to 67 would save $113 billion over 10 years.

The drop came from CBO’s new judgment that the would-be beneficiaries — those who would have enrolled at age 65 — tend to be in better health and are “substantially less expensive, on average” than beneficiaries who are already in Medicare before turning 65.

In addition, many of those beneficiaries between 65 and 67 continue to have employer-based health insurance on their own or through their spouses, and use Medicare as a second payer for coverage.

“Medicare spends much less on Part A services for those beneficiaries than it does for beneficiaries for whom Medicare is the primary payer, and it does not pay for services covered under Parts B and D,” CBO found. Part A is for hospital care, while Part B is for physician services and Part D for prescriptions.

CBO now estimates the net costs of those beneficiaries to Medicare, under current law, is about 60 percent lower than what it previously estimated. That results in a much smaller reduction in Medicare spending than previous estimates, and thus lower savings overall.

The office’s estimate of what such a change would do to increase spending for Medicaid and the insurance subsidies has not changed much, however.

Raising the eligibility age also would slightly increase the number of uninsured Americans, the CBO found.

Of the 5.5 million people who would be affected by the age change in 2023, about 50 percent would get insurance through an employer, 15 percent would continue to qualify for Medicare on the basis of disability, 15 percent would buy insurance through the exchanges or the non-group market, 10 percent would get Medicaid coverage and 10 percent would be uninsured, the office said.

emilyethridge@cqrollcall.com

Source: CQ News
Round-the-clock coverage of news from Capitol Hill.
© 2013 CQ Roll Call All Rights Reserved.

Reid: ‘There’s Not Going to Be a Grand Bargain’

Majority Leader Harry Reid said Thursday that he expected little more from the formal House-Senate budget conference than some relief from automatic spending cuts under sequestration.

The Nevada Democrat called the suggestion of a “grand bargain” including an overhaul of entitlement programs “happy talk.”

“I hope that we can do some stuff to get rid of sequestration and go on to do some sensible budgets — budgeteering. I’ve got a wonderful leader of my Budget Committee, Patty Murray from the state of Washington, and I feel pretty comfortable that she’ll do a good job for us, but … I hope there would be a grand bargain, but I don’t see that happening,” Reid said on Nevada radio station KNPR.

Murray and House Budget Chairman Paul D. Ryan, R-Wis., are set to convene the first formal meeting of the budget conference committee on Oct. 30.

Read More on Roll Call: Reid: ‘There’s Not Going to Be a Grand Bargain’