Mission & History
The Institute on Taxation and Economic Policy (ITEP) is a non-profit, non-partisan research organization that works on federal, state, and local tax policy issues. ITEP's mission is to ensure that elected officials, the media, and the general public have access to accurate, timely, and straightforward information that allows them to understand the effects of current and proposed tax policies. ITEP's work focuses particularly on issues of tax fairness and sustainability. ITEP works directly with lawmakers, non-governmental organizations, the public, and the media to achieve these goals.
Since its founding in 1980, ITEP's unique resources and capabilities have enabled it to provide policymakers, advocates, and the public with important information regarding state and federal tax policy. Today, the bulk of ITEP's work involves analyzing the distributional and revenue effects of current tax laws, as well as complex tax proposals made at both the state and federal levels.
To do this work, ITEP built a "microsimulation tax model" in 1996 capable of analyzing the tax systems of all fifty states, the District of Columbia, and the federal government. A microsimulation model uses a large sample of tax returns and other data to estimate the impact of tax systems and tax proposals on actual taxpayers at different income levels. This is the same type of tax model used by the U.S. Treasury Department, the Congressional Joint Committee on Taxation, and the Congressional Budget Office, as well as by many state revenue departments. Unlike ITEP's model, however, these organizations' models are only capable of producing analyses at the federal level, or in the case of state revenue departments, in a single state. A significant portion of ITEP's work consists of keeping its model up-to-date with the most current economic projections, and with recent changes to state and federal tax law.
ITEP's tax model is in such demand that requests come in daily for analyses of specific projects and proposals. As lawmakers propose plans that would affect state revenue streams, ITEP conducts timely analyses of the impact of these plans. At the state level, ITEP disseminates these analyses in two ways: by releasing independent reports describing the results of these analyses, and, more frequently, by collaborating with state-based groups interested in building their own publications around our data.
When working with state-based grounds, ITEP often works to help build coalitions, either by reaching out to organizations with little history of involvement in state tax policy, or by helping bring together multiple groups in a given state that are interested in fiscal policy reform. ITEP also disseminates its analyses to media outlets to help ensure the press is sufficiently well informed about basic tax policy issues, and about the equity and adequacy issues at stake in specific state fiscal policy debates. In an environment where policymakers (particularly at the state level) are often uninformed about the real consequences of their tax proposals, ITEP seeks to ensure that these important fiscal policy decisions are not made in an informational vacuum.
Each year, ITEP publishes tax incidence analyses in dozens of states, responding to requests from lawmakers and non-profit groups around the nation. ITEP also has published a series of detailed reports providing in-depth insights on reform possibilities in various states. These reports have helped to influence important policy debates in Arkansas, Illinois, Iowa, Minnesota, and New York, among many others. ITEP also regularly conducts multi-state and 50-state analyses. An example of the latter type of publication is ITEP's flagship report, titled Who Pays? A Distributional Analysis of the Tax Systems in All 50 States. First published in 1996, and updated most recently in 2015, Who Pays? shows the distributional impact by income level of all major state and local taxes in each state, as well as in the District of Columbia. Its major finding is that, on average, state and local tax systems require the poorest taxpayers to pay the highest effective tax rates. The report has been used by countless policymakers, journalists, advocates, researchers, citizens, state revenue departments, legislative fiscal offices, and other key stakeholders since its publication.
Other major ITEP reports include Undocumented Immigrants' State and Local Tax Contributions, State Tax Codes As Poverty Fighting Tools, The Sorry State of State of Corporate Taxes, as well as The ITEP Guide to Fair State and Local Taxes (2011), which serves as a basic primer for policymakers and the public on the important issues associated each major tax and revenue source utilized at the state and local levels.
ITEP's analyses also frequently focus on federal policy issues. ITEP staff have advised members of Congress and their staff on tax reform options, and ITEP analyses have been among the most widely cited measures of fairness for every major federal tax proposal in the past fifteen years. Throughout its existence, the bulk of ITEP's federal-level work has been done in partnership with Citizens for Tax Justice (CTJ). ITEP provides CTJ with much of the research contained in important studies released by that organization. CTJ's studies of federal corporate income taxation in the early 1980's are widely credited with fomenting an intense public debate over the wisdom of tax-based corporate subsidies. This debate eventually helped lead to a bipartisan consensus that many of these tax provisions were unwise public policy, culminating in the Tax Reform Act of 1986.
ITEP and CTJ reports, such as Inequality & the Federal Budget Deficit (1991), helped inspire new thinking about tax policy that later lead to the federal tax reforms adopted in 1993. Another ITEP and CTJ report, titled The Hidden Entitlements (1996), provided a detailed analysis and critique of the hundreds of billions of dollars in hidden spending programs buried in the federal tax code.
More recently, ITEP has provided CTJ with much of the support needed to update its studies of corporate income taxes, and to analyze tax proposals put forth by members of Congress, Presidents, political candidates, other organizations, and CTJ itself.
Additional resources for learning about ITEP: