Analysis of Changes in the Delaware Tax Code 1960 1974

8/14/2019 Analysis of Changes in the Delaware Tax Code 1960 1974

1/76


2/76


3/76


4/76


5/76


6/76


7/76


8/76


9/76


10/76


11/76


12/76


13/76


14/76


15/76


16/76


17/76


18/76


19/76


20/76


21/76


22/76


23/76


24/76


25/76


26/76


27/76


28/76


29/76


30/76


31/76


32/76


33/76


34/76


35/76


36/76


37/76


38/76


39/76


40/76


41/76


42/76


43/76


44/76


45/76


46/76


47/76

r---


48/76

OTHER FACTORS AFFECTING DATA - TOBACCO TAX

1962 - Field audi ts began

1965 - Completion of Delaware Turnpike--hurt sales (fewerstopping points)

1966 - State jo ined a mul t i - s t a t e c oo pe ra ti ve t o ~ u t down oni l l e g a l imports and sales (The North Carolina Operation)

1968 - Increased eff ic iency, according to the department

1969 - December 17--Court of Chancery f inds col lec t ion procedurefor t ob ac co p ro du ct s uncons t i tu t iona l

Rate of tax per twenty c igare t tes

Sta te 1959 60 61 62 63 64 65 66 67 68 69 70 71 72 73

Del. 3 3 3 5 5 5 5/7 7 7 7 7/11 11 11/14 14 14

Md. 3 j 3 6 6 6 6 6 6 6 6 6 6 6 6

Pa . 5 6 6 6 6 8 8 8 8 13 13 18 18 18 18

N.J. 5 5 5 7 7 8 8 8 11 14 14 14 14 14 19

Ir

r

rlrfrf

f!


49/76

VIII .MOTOR VEHICLE REGISTRATION

All motor veh ic les , t r a i l e r s , s e mi - t r a i l e r s , and pole

t r a i l e r s tha t are "driven or moved" must be reg i s te red and

l icensed by the s t a t e .

There i s a f l a t ra te of $20 per year fo r "pleasure v e h i c l e s , "

a category tha t encompasses the vas t major i ty of reg i s te red

v e h i c l e s . The o the r c lasses have r a t e s based on the weight

of the i nd iv idua l veh ic le . The pleasure veh ic le r a t e once was

a l so determined by weight, an d the change to a f l a t r a t e has

brought much cr i t i c iam from those who fee l th a t the small ca r

owners a re paying par t of what the b ig car owners should be

paying.

The l i censes are va l id for one year, an d they expire a t the

end of t he c or re sp on di ng month in which they were i ssued the

previous year. A recent change from quar te r ly exp i ra t ions was

r


50/76

r


51/76

Mjus tments of Motor Vehicle Regis t ra t ion Data

In 1965, there was a r a t e change for pleasure vehic les .

Pr ior to the change, those pleasure veh ic les \oleighing more

than 4000 pounds were taxed a t $16 per year, \olhile those weigh

ing l ess were t ax e d a t $10. After the change, the two c lasses

were e l imina ted , and a l l pleasure vehic les \olere an d s t i l l are

taxed a t a r a t e of $20 per year.

Since the time of the change, l i g h t pleasure veh ic les have

accounted for p,bout 75.9% of the t o t a l tax rece ip t s from pleasure

vehic les , and he8vy ones about 24.1%, fo r an overa l l net increase

of 81.9% in t h ~ pleasure vehicle category. Since r l casure

veh ic les w e r ~about 39.7% of the t o t a l Hotor Vehicle Regis t ra

t ion Tax, th e net e f f e c t of the change was an increase o f 32.5%,

so a l l da ta p r i o r to J u l y ~1965, was mult ipl ied by 1.325.


52/76

DELAWARE CODE CHANGES - NOTOR VEHICLE REGISTRATION TAX

Effec t iveDate

9-29-61

7-01-65

6-30-70

7-06-70

5-21-73

Descr ipt ion of Change

Small r a t e increase i r some minor areas

Pleasure vehicle r a t e ra ised from $10 (up to 4.000pounds). $16 (ov er 4 .0 00 pounds) to $20 ( regard lessof weLgb t ) .

Changed from quar te r ly to monthly expi ra t ions .

Collect ion and adminis t ra t ion dut ies moved fromHi.ghv .. ay Department to Department of Public Safety.

New category introduced, r ec r ea t i ona l vehic les .


53/76

IX. INHERITANCE AND ESTATE TAXES

Delaware L . t,loys both an es ta te tax and an inher i tance tax .

The former ex i s t s merely to make U f e of allowances in the cor-

responding federa l law. The l a ~ t e r ,which c o ~ p r i s e sthe bulk

of the revenue from th i s source, ha s a f a i r l y complex r a t e

system, broken down by the amount of the inher i t ance and the

r e l a t i on of the giver to the receiver (h igher r a t e s fo r more

d i s t an t r e l a t i ons ) .

This tax i s extremely unpredic table as fa r as rece ip t s

are concerned. Delaware i s such a small s t a t e (popula t ion-

wise) tha t the death of a s ing le very r i ch person wi l l cause a

notable upturn in any yea r ' s inher i tance t axes . while ac tuar ies

can give us a re l i ab l e est imate as to the number of Delaw9reans

who wi l l die in any given year, they cannot accura te ly pred ic t

when members of the DuPont family wi l l die . Such a predict ion

r --.


54/76

a:0

x 8

' - - ...J


55/76

DELAWARE CODE CHANGES - INHERITANCE AND ESTATE TAX

Effec t iveDate

7-30-71

9-30-71

Descr ipt ion of Change

Redef ini t ion o f brackets in some areas , and extensivera te increase in a l l areas of inher i tance taxes .

Implementation of S tate G ift Tax.

r


56/76

r

X. ALCOHOLIC BEVERAGE TAX

Taxes are imposed on the d i s t r ibu t ion of alcoholic beverages

in Delaware. All makers, d i s t r i b u t o r s , and r e t a i l e r s of such

beverages must be l icensed by th e s t a t e . The tax i s imposed

on whoever makes the beverages within the s t a t e , and whoever

brings them already made into th e s t a t e .

Although tax r a t e s vary widely from s t a t e to s t a t e an d

cons t i tu t e a large percentage of the price to the consumer,

probably the la rg es t f ac to r causing Delawareans to buy l iquor

ap.d beer in o ther s t a t e s (which i s t echnica l 1 v i l l e g a l except

fo r one quart per person per day, but unoff i c i a l ly permit ted)

i s the existence of f a i r t rade laws tha t wholesalers use to

t h e i r advantageto force

s e l l e r s int h i s

s t a t eto charge

a r t i c i c i a l l y high pr ices . Because of these " la w s, " d is co un t


57/76

These taxes a re co l lec ted an d administered by the Divis ion

o f Revenue, Department of F in an ce , w ith aid from th e A lc 0h olic

Beverage Commission.

r


58/76

crto-

1"'-........ . . . . . . . ~ . . - . . . . - - - ~ " - ~ ~ " ~ - , I ' , . ( , ~ .L.

............., -

, - - - - - - - r

64 .00 66 .00

-

sa.oo ro.oo on .00 74.00 7S.oo 78 .co sb.oo 82 .0 0 s4.00TINE1:""0

....l


59/76

Adjustments of Alcohol Tax Data

The Alcohol Tax Data as represented here is the sum of

taxes on Wine, Beer, Spi r i t s , and other th ings . The r ece ip t s

from the Beer Tax.comprise about 20% of the t o t a l and Wine Tax

rece ip ts come to about 10%. Sp i r i t s i s divided in two groups

depending on the e thy l alcohol content . The tax on s p i r i t s

with l ess t an 25% e thy l alcohol comprises only about 1% of the

t o t a l , while tha t on s p i r i t s with 25% or more e thy l alcohol

accounts for about 50%.

These percentages are v i t a l to judging the e ff ec t of r a t e

changes. Adjustments were made as follows.

In 1961, the Wine Tax was ra ised by 130%, so an adjustment of

13% was necessary. In 1969, th e higher Spir i t s Tax r a t e was

ra i sed by 45%, so an adjustment of 22% was made. In 1971, both

Spi r i t s Taxes were increased (low by 67%, high by 36.4%) which


60/76

DELAWARE CODE CHANGES - ALCOHOLIC B EV ER AG E TA X

Effec t iveDate

6-23-61

7-01-69

7-23-70

8-15-71

10-01-72

6-25-73

Description of Change

Rate for Wine ra ised from 35C to 80C per gallon.

Rate for s p i r i t s more than 25%, from $1.15 to $1.65

pe r gallon.

Collection now by Finance Department.

Rate for s p i r i t s more than 25%, from $1.65 to $2.L5Rate for sp i r i t3 no more than 25%, from $.90 to $1.50

Rate for Wine lowered from 80 to 40C.

Overal l revision of l icensing of makers, dis t r ibu te r s ,r e t a i l e r s .


61/76

XI. PARIMUTUEL SALES AND ADMISSIONS

Revenues f ~ o mEquine r a ci n g e s ta b li s hm e n ts i s broken into

three areas--Horse (Thoroughbred) racing, Horse Racing in Kent

County, and Harness Rac ing.

Taxes are levied in each area both on a per capita

attendance base and on the parimutuel handle. Current ra tes are

l O ~ per admission for Harness Racing and Horse Racing in Kent

County, 2 0 ~ p er a dm is si on for Horse Racing, 5% of the par i -

mutuel handle fo r H or se R ac in g and Horse Racing in Kent County,

an d 5 ~ i oof the handle fo r Harness Racing ( ~ %of th i s tax i s

earmarked for the Delaware Standardbred Fund).

These taxes are col lected and administered by th e D ivision

of Revenue, Department of Finance with the aid of the State

Racing Commission.

,.f

If

r -,


62/76

RACING DAYS

Year 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74

t

I

~-....J

I

D e l a . P r k . 55 54 54 52 55 55 55 55 61 60 61 65 64 65 65

Dover Downs( t h o r o u g h b r e d ) 0 0 0 0 0 0 0 0 0 54 54 44 43 54 25--Dover Downs( s t a n d a r d b r e d ) 0 0 0 0 0 0 0 0 0 0 42 85 78 74 75

Brandywine * * * * * 89 75 92 100 101 10 1 101 101 10 4 13 8

George town * * * * * 0 68 58 77 65 44 18 29 0 0

H a r r i n q t o n * * * * * 36 40 55 62 56 76 62 68 64 80

TOTAL * * * * * 17 0 23 8 26 0 30 0 33 6 37 8 37 5 38 3 36 1 383

* U n a v a i l a b l e

r -


63/76


64/76

A d j u s t ~ 2 n t sof Parimutuel Sales and Admission Tax Data

The ra tes for the var ious sources of th i s tax ha ve cha nge d

numerous times (see Delaware Code Changes). Research showed

t ha t recent ly, the subdivis ions paid approximately the following

shares of the t o t a l s reported here: Horse Racing, 31%; Horse

Racing in Kent County, 7%; and H ar ne ss R ac in g, 55%.

The above f igures were used a lon g w it h the r a t e changes as

r e p o r t e ~in the Delaware Code to come up with the following

fac tors of adjustments: before June 1965, 1.36; up to July 1965,1.274; up to June 1967, 1.099; up to December 1967, 1.116;

up to May1970, 1.048; up to December 1970, 1.80; up to July 1971,

1.096; up to December 1971, .97.

This graph must be looked a t i n c on ju nc ti on with the t ab l e

concerning racing days through the years . The rece ip ts by them

f


65/76

DELAiJARE CODE CHANGES - PARIHUTUEL TA X

Effec t iveDate

5-26-65

7-01-65

11-01-65

1-01-67

7-27-67

12-29-67

3-08-69

5-28-70

1-01-71

8-01-71

De sc r i p t i on of Chang

Throughout per iod- -add i t ions to length of permittedmeets ( increase in t o t a l racing da tes )

Horse Racing handle ra te ra ised from 4 ~ to 5 ~ % .

H a r n e s ~Racing handle ra te ra i sed from 3 ~ to 4 ~ % .

Georgetown H a r ~ e s sTrack opened.

Law c l a r i f i e d to assure prompt payment of taxesweekly.

Horse Racing in Kent County sec t ion es tab l i shed ,r a t e s 10 p er a dm is si on , 4 ~ %of handle.

Harness Racing handle ra te ra i sed froT. 4 ~ to 5%.

Dover Downs opened.

Horse Racing handle ra te Lowe r cd from 5 ~ to 5%.

Horse Racing handle ra te lowered from 5 to4 ~ % .

Horse Racing handle ra te ra i sed from 4 ~ to 5 ~ % .Horse Racing in Kent County handle r a t e ra ised from


66/76

XII. REALTY TRANSFER TAX

The Realty Transfer Tax j l a tax lev ied on the document

t r ans f e r r i ng ownership of r e a l proper ty. I t i s levied not onlv

on sa les of land (with or without bui ldings thereon) but appl ies

equ al ly to sa les of condominiums and t ransfers of r i gh t s under

l eases with a p o t e n t i a l dura t ion o f a t l e a s t f ive years . The

presen t r a t e o f the tax i s 2% of value, and value i s ascer ta ined

usua l ly by sa le pr ice , but sometimes by other measures.

The tax i s co l lec ted and administered by the Division of

Revenue , Depar tmen t of F i n a ~ c e .

t - ,r


67/76

f 1 - - '8 .00 82 .0 0 64 .0 0e.ocS.on

R = Raw Data

A = A d j u s t e d Moving Average

sam ?O.0 0 ~ 6 0 1 4 . 0 0TINE

.;~

!

. .. , .i

It: .. Ir1; l:

I I!

~.,

\

}{EAL ESTATE TAX

~

!~

Po~ , oK " .

' - " " . ___ r. j.( I \,f I i/ II

y\/v\;;-jr--= .....

66.00e .cc

oo~ i 1111I Ill" ! jj " ' - " ' ~ " ~ - , . - - -

06z .0 0

r -

.z -:.~ .

.. 1 : ~ _ :

e 1oiN-, ... ,

w '

~ o l

~ ~I

i00

L


68/76

~ i u s t ~ e n t sof Realty Transfer Tax DDta

The o nl y a dj us tm en t made in the Realty Transfer Tax data

was due to a doubling of the ra te as of August 1, 1971. The

adjustment was mul t ip l ica t ion of a l l previous data by 2.

DELAWARE CODE CHANGES - REALTY TRANSFER TAX

Effect iveDate

8-01-65

7-23-70

8-01-71

7-07-73

DeRcription ofChange

Effect ive date of the law ( ra te - - l%) .

Collect ion and adminis t ra t ion dut ies t ransfer red f ~ o mTax Department to Department of Finance.

Rate ra i sed from 1 co 2%.

Condominiums and long leases made taxable \ ~ h e nt ransfer red .

r ~ ,I


69/76

XIII . INSURANCE TAXES

The Insurance Tax in Delaware i s based on gross premiums

received. The overwhelming m ajo rity of premiums are taxed a t

a r a t e of 1.75%.

A s igni f icant portion of the 1.75% tax goes to help fund

f i r e companies, and tha t port ion i s determined each year by the

amount of premiums paid for f i r e and re la ted insurance.

Premiums for workmens' compensation insurance are taxed a t

a ra te of 4%, while pro f i t s from marine insurance are taxed a t

5%.

The tax i s due March I each year, and i s col lec ted and

administered by the Insurance Cotnmission.

f

f

}

r - ,


70/76


71/76

Adjustments of Insurance Tax D8ta

Beginning in 1972, the Fire Tax was takpn out of the 1.75%

Insurance Tax rece ip ts , ra ther than being c o ll e ct e d s e pa r at e ly.

Therefor.e, each year beginning with 1973, an adjustment must be

made to make up for. the t r r tnsfer of funds for t h i s purpose.

Thus far, t h i s t r ans fe r ha s been made as a lump sum in

April , and amounted to $1,697,000 in 1973 and $1,780,000 in

1974. Adjustments were made to the data accordingly.

DELAWARE CODE CHANGES - I ~ S U R A ! < C ETAXES

Effec t iveDate

1-01-72

Descript ion of Cha,Eg,_e _

Fire tax now deducted f rom 1.75% tax rece ip ts andt ransfer red to a spec ia l fund instead of or ig ina l lygoing into the spec ia l fund. Tax is now paid by

r t


72/76

XIV. PUBLIC lITILITY TAX

The Delaware Public Ut i l i t y Tax i s a tax placed on te lephone,

te legraph, gas, e l e c t r i c i t y, and cable t e lev is ion usage. I t i s

imposed in addi t ion to other taxes such as l i cense taxes , income

t axes , and spec ia l i zed gross rece ip t s and pr iv i lege t axes .

This tax in i t s present form was ins t i t u t ed in 1971, and has

been c r i t i c i z e d because of i t s regress ive fea tu re s; th at i s , i t

taxes es sen t i a l s such as power fo r heat ing, cooking and l igh t ing

an d as such, h i t s the low incomed the hardes t .

The ra t e of the tax i s 5% of the t o t a l cost to the consumer.

The tax on telephone use i s express ly passed on to the consumer

an d i s noted as a tax on the b i l l as received from th e te le ph on e

f

i

company. However, the taxes on te legraph, e l e c t r i c i t y, gas , an d j}

cable t e lev is ion are spec i f i c a l l y wri t ten in to the Delaware Code

to be taxes on d i s t r i bu t e r s and not on ~ o n s u m e r sbut a noth er

r ...,


73/76


74/76

DELAWARE CODE CHANGES - PUBLIC l ~ I L I T YTAX

Effect iveDate

8-01-71

7-01-73

D es cr ip ti on o f Change

Law in to e ffec t .

Te le ph on e u se by the s t a t e and i t s p o l i t i c a l subdiv is ions exempted from the tax.


75/76

XV. OTHER TAXES

Fo r convenience and iue to t he i r s ize r e l a t i ve to revenue

generat ing a b i l i t i e s , the r em a in in g r ev en ue sec tors are con-

s ol id at ed i nt o one category, OTHER TAXES. Obviously, s ince they

are conso l ida ted , there wi l l be no l i s t of code changes or

adjustments to th i s s e r i e s . In the fu tu re , i f t he i r s ize or

economic s ign i f i cance warrants i t , one or a l l of these se r i e s w i l l

be a na ly ze d i nd e pe n de n tl y. Presen t ly, as se t out in the monthly

repor t s of theDepartment

o f Finance, they are as fol lows:a. C orporation Feesb. Motor Vehicle - Operator License Fee

- Document Fees- Ti t l ing Fees- Reference Fees

c. Dividend and In t e r e s td. Hospi ta l Board and Treatmente. Ccurt Fines and Costsf . Motor Carr ie r Useg. Telephone and Telegraph

J

Ir

r


76/76

V I

0 '

>

Analysis of Changes in the Delaware Tax Code 1960 1974

Documents

Transcript of Analysis of Changes in the Delaware Tax Code 1960 1974