In recent years, states have increasingly considered taxing services by expanding the sales and use tax base — and 2019 is no different. So far this year, taxation of services bills have been introduced in nine states: California, Connecticut, Florida, Montana, Nebraska, Texas, Utah, Virginia, and Wyoming. We also expect legislation will be introduced in Rhode Island and South Carolina.
Despite the legislative interest over the years, no state has successfully implemented a broad sales tax base expansion. There have been selective expansions to some personal services (for example, in North Carolina), but no successful expansion to professional services. There are even several examples of states passing sales tax base expansions and then repealing them shortly thereafter when lawmakers realized they would result in negative impacts on the state economy (Florida, Massachusetts, Michigan, and Minnesota).
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by liz malm
march 6, 2019