Substitute Bill No. 1007 Summary

• Tax Credit Limits: Reduces corporate tax credit caps from 70% to 30% of tax liability for calendar year 2011 onward, with temporary increases to 100% for businesses that create net new jobs (multiplying average monthly net employee gain by $6,000).

• Corporate Tax Surcharges: Increases additional corporate taxes from 10% to 20% for income years 2012-2013 on companies with gross income exceeding $100 million.

• Sales and Excise Tax Increases: Raises cigarette tax from 150 to 170 mills per cigarette; increases tobacco tax on snuff from 55 cents to $1 per ounce; adds new 15% tax on hotel occupancy (up from 12%); imposes 7% sales tax on luxury items (vehicles over $50,000, jewelry over $5,000, clothing/accessories over $1,000).

• New Taxable Services: Expands sales tax to include motor vehicle storage, packing/crating, towing, limousine services, pet grooming, cosmetic medical procedures, manicure/pedicure, and spa services effective July 1, 2011.

• Income Tax Changes: Implements new progressive income tax rates for 2011 onward with higher rates on upper-income earners (6.70% top rate); establishes earned income tax credit equal to 30% of federal EITC; adds "benefit recapture" surcharge on high-income taxpayers ranging from $2,250 to $4,500.