State Rundown 2/20: Tools to Address Corporate Tax Avoidance and Property Tax Affordability

A new ITEP report finds that states could raise $19 billion a year with one policy change targeting corporate tax avoidance. That policy, worldwide combined reporting, strengthens state corporate taxation by giving states a full view of multinational corporate profits, essentially eliminating the tax savings that companies currently see by pretending their profits were earned in Switzerland, the Cayman Islands, and other international tax havens.

Meanwhile, states across the country are exploring property tax reforms in an effort to account for the rising tax bills that have accompanied increased home values. The proposals vary heavily and often miss the mark. Concerns linger over what lost revenue would mean for schools, parks, and other local services. Affordability is a real issue for plenty of families, but many policies under consideration fail to target tax cutting efforts toward those who need it most.

Major State Tax Proposals and Developments

• FLORIDA Gov. Ron DeSantis publicly supported elimination of all property taxes in the state. The policy would require 60 percent voter approval and would have serious consequences for local government’s ability to fund schools, public safety, libraries, and parks. – NEVA BUTKUS 

• Congestion pricing in NEW YORK CITY is under threat. Following actions by the Trump administration, the Department of Transportation revoked the approval for the program. The MTA and Gov. Kathy Hochul’s administration have sued, saying the federal government cannot unilaterally suspend the entire program. —RITA JEFFERSON  

State of the State Addresses

• ILLINOIS Gov. JB Pritzker laid out his plan to close Illinois’ impending $3.2 billion deficit in his address. The plan would raise $469 million in new revenue through adjusting tax rates on certain types of gambling, pausing a sales tax transfer to the road fund, and offering temporary amnesty for taxpayers making delinquent tax payments. 

State Roundup

• A bill that would authorize a tax credit for private school tuition has made its way to IDAHO Gov. Brad Little’s desk. If signed, the legislation would provide up to $5,000 per student for eligible expenses, including private school tuition. 

• INDIANA senators are moving a bill to create a $500 refundable tax credit for newborns that parents can claim the first year of an infant’s life. The credit would be available to eligible families making up to 720 percent of the federal poverty line.  

• A Senate proposal in IOWA would reallocate funds currently constitutionally allocated to the Natural Resources and Outdoor Recreation Trust Fund toward property tax relief. To become law, the proposal would need to be passed out of two General Assemblies then approved by voters. 

• MISSOURI state senators have advanced a proposal to eliminate the state’s income tax, possibly funded by expanding the state’s sales tax to services. However, the measure does not specify which services should be taxed and would require a ballot initiative. As drafted, the cost of the measure is highly uncertain. 

• In MONTANA, 13 Republicans in the House joined all their Democratic colleagues to vote down a bill that would have offered tax credits for private school tuition. 

• Senate leadership in NORTH CAROLINA dismissed concerns over the state’s projected $823 million drop in revenue expected in 2026 due to impending tax cuts. 

• OHIO lawmakers introduced legislation that freezes property taxes for seniors with incomes under $70,000 and includes a total exemption for disabled veterans.  

• Lawmakers in SOUTH DAKOTA are considering a resolution to study property tax policies after tabling multiple property tax cut bills that have surfaced.  

• The TEXAS House will vote on a new property tax cut plan that has already cleared the Senate. The legislation would increase the state’s homestead exemption from the first $100,000 to $140,000 of home value. The plan would cut taxes for the average homeowner by $360 a year, but many are concerned about the impact of the revenue loss on school funding.  

• Another round of income tax cuts in UTAH remains up in the air after budget projections show $112 million less than expected in revenue. Lawmakers, however, still have their sights on eliminating taxes on income from Social Security. 

• Local government leaders in WYOMING are protesting proposals that would cut property taxes at the expense of local revenue that helps fund schools, elder care, first responders, and infrastructure services. 

What We’re Reading

• As mentioned above, a newly released ITEP report highlights the revenue potential available to states from adopting worldwide combined reporting. The policy, which strengthens state corporate taxes by targeting corporate tax avoidance, could raise up to $19 billion a year.  

• In a recent blog post, ITEP’s Aidan Davis discusses early-session state tax trends, proposals, and state action to date.  

• A recent report from Fresnoland found that nearly $2.5 billion – almost half – of property tax breaks for farms in California are going to mega-farms owned by investors. 

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