Institute on Taxation and Economic Policy

ITEP's Research Priorities

brief  

Reducing the Cost of Child Care Through State Tax Codes

September 14, 2016 • By Aidan Davis, Meg Wiehe

Low- and middle-income working parents spend a significant portion of their income on child care. As the number of parents working outside of the home continues to rise, child care expenses have become an unavoidable and increasingly unaffordable expense. This policy brief examines state tax policy tools that can be used to make child care more affordable: a dependent care tax credit modeled after the federal program and a deduction for child care expenses.

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Rewarding Work Through State Earned Income Tax Credits

September 14, 2016 • By Aidan Davis, Lisa Christensen Gee, Meg Wiehe

The Earned Income Tax Credit (EITC) is a policy designed to bolster the earnings of low-wage workers and offset some of the taxes they pay, providing the opportunity for struggling families to step up and out of poverty toward meaningful economic security. The federal EITC has kept millions of Americans out of poverty since its enactment in the mid-1970s. Over the past several decades, the effectiveness of the EITC has been magnified as many states have enacted and later expanded their own credits.

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Options for a Less Regressive Sales Tax

September 14, 2016 • By Carl Davis

Sales taxes are one of the most important revenue sources for state and local governments; however, they are also among the most unfair taxes, falling more heavily on low- and middle-income households. Therefore, it is important that policymakers nationwide find ways to make sales taxes more equitable while preserving this important source of funding for public services. This policy brief discusses two approaches to a less regressive sales tax: broad-based exemptions and targeted sales tax credits.

news release  

News Release: U.S. Should Take a Page from European Commission’s Book And Crack Down on Corporate Tax Avoidance

August 30, 2016 • By ITEP Staff

Following is a statement by Matt Gardner of the Institute on Taxation and Economic Policy regarding the European Commission’s ruling today that the Apple Corporation must pay as much as €13 billion ($14.5 billion)  in back taxes due to an illegal tax break granted by the Irish government. “The European Commission action is a chastening […]

brief  

How State Tax Changes Affect Your Federal Taxes: A Primer on the “Federal Offset”

August 22, 2016 • By Dylan Grundman O'Neill

Read this brief in PDF here. State lawmakers frequently make claims about how proposed tax changes would affect taxpayers at different income levels. Yet too many lawmakers routinely ignore one important consequence of their tax reform proposals: the effect of state tax changes on their constituents’ federal income tax bills. Wealthier taxpayers in particular can […]

brief  

Indexing Income Taxes for Inflation: Why It Matters

August 22, 2016 • By Dylan Grundman O'Neill

Read brief in PDF here. All of us experience the effects of inflation as the price of the goods and services we buy gradually goes up over time. Fortunately, as the cost of living goes up, our incomes often tend to rise as well in order to keep pace. But many state tax systems are […]

West Virginia Center on Budget and Policy: Modernizing West Virginia’s Marijuana Laws

August 18, 2016

“Over the last two decades, states across the country have modernized their marijuana laws to reflect the growing evidence that doing so will help reduce criminal justice costs, help treat some medical conditions, and boost tax revenues and their state’s economy. As of 2016, four states and the District of Columbia have legalized the recreational […]

brief  

The Folly of State Capital Gains Tax Cuts

August 17, 2016 • By Dylan Grundman O'Neill, Meg Wiehe

Read the brief in a PDF here. The federal tax system treats income from capital gains more favorably than income from work. A number of state tax systems do as well, offering tax breaks for profits realized from local investments and, in some instances, from investments around the world. As states struggle to cope with […]

report  

Achieving Sustainable Infrastructure Revenue with Gas Tax Reform

August 8, 2016 • By Carl Davis

This brief outlines the causes of Louisiana's infrastructure revenue shortfall and offers recommendations for how the state can achieve "sufficient increased levels of recurring funding to address the transportation backlog in highway and bridge maintenance needs in Louisiana," as per the Task Force's mandate.

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Why Sales Taxes Should Apply to Services

July 27, 2016 • By Carl Davis

Read this Policy Brief in PDF here.  General sales taxes are an important revenue source for state governments, accounting for close to one-third of state tax collections nationwide. But most state sales taxes have a damaging structural flaw: they typically apply to most sales of goods, such as books and computers, but exempt most services […]

report  

Income Tax Offers Alaska a Brighter Fiscal Future

July 12, 2016 • By Aidan Davis, Carl Davis

Read this report in PDF. This month, Alaska legislators regroup in yet another special session where they will consider legislation to address a yawning budget gap created by declining oil tax and royalty revenues. Through the use of his veto pen, Gov. Bill Walker has partially addressed the gap with cuts to state spending and […]

brief  

Sales Tax Holidays: An Ineffective Alternative to Real Sales Tax Reform

July 11, 2016 • By Meg Wiehe

This brief was updated July 2018 Read this Policy Brief in PDF here. Sales taxes are an important revenue source, composing close to half of all state tax revenues.[1] But sales taxes are also inherently regressive because the lower a family’s income, the more the family must spend on goods and services subject to the […]

report  

Ryan Tax Plan Reserves Most Tax Cuts for Top 1 percent, Costs $4 Trillion Over 10 Years

June 29, 2016 • By ITEP Staff

A new distributional analysis of Republican Speaker of the House Paul Ryan’s “A Better Way” policies finds that the plan would: • Add $4 trillion to the national debt over a decade. • Overwhelmingly benefit the top 1 percent of tax payers while resulting in a net loss for the bottom 95 percent of taxpayers. • Slash corporate […]

brief  

State Corporate Tax Disclosure: Why It’s Needed

June 29, 2016 • By Lisa Christensen Gee

Few state tax trends are as striking as the rapid decline of state corporate income tax revenues. As recently as 1986, state corporate income taxes equaled 0.5 percent of nationwide Gross State Product (GSP) (a measure of statewide economic activity). But in fiscal year 2013 (the last year for which data are available), state and local corporate income taxes were just 0.33 percent of nationwide GSP--representing a decline of over 30 percent.

report  

How Long Has it Been Since Your State Raised Its Gas Tax?

June 28, 2016 • By Carl Davis

An updated version of this report has been published with data through July 1, 2017. Read this Policy Brief in PDF form Many states’ transportation budgets are in disarray, in part because they are trying to cover the rising cost of asphalt, machinery, and other construction materials with a gasoline tax rate that is rarely […]

brief  

State Treatment of Itemized Deductions

June 2, 2016 • By Dylan Grundman O'Neill, Meg Wiehe

Read this Policy Brief in PDF Form Map of State Treatment of Itemized Deductions Thirty-one states and the District of Columbia allow a group of income tax breaks known as “itemized deductions.” [1] Itemized deductions are designed to help defray a wide variety of personal expenditures that affect a taxpayer’s ability to pay taxes, including charitable […]

Michigan League for Public Policy: Review tax expenditures to help fix Michigan’s broken revenue stream

May 18, 2016

“Michigan has a budget problem, and simply put, there just isn’t enough money to go around. Michigan has experienced crisis after crisis—the Great Recession, nearly record-high unemployment, municipal financial emergencies, the city of Detroit’s bankruptcy, the Flint water crisis and the financial struggles of Detroit Public Schools to name a few. In attempting to fix […]

West Virginia Center on Budget and Policy: New Revenues to Balance the Budget Don’t Have to be Regressive

May 17, 2016

“Last week, Governor Tomblin finally issued the call for the legislature to come back into a special session to balance the FY 2017 budget. The special session will begin today, May 16th, and the governor will once again submit a budget proposal for the legislature to consider. During the regular session, Governor Tomblin proposed $130 […]

Oklahoma Policy Institute: New bill would devastate a key tax credit for Oklahoma working families

May 13, 2016

“Yesterday, a letter signed by more than 150 Oklahoma clergy was delivered to lawmakers and Governor Fallin, urging them not to slash key tax credits for working families to fix the state’s revenue problems. They were joined by numerous non-profit and foundation leaders who spoke out against cuts to the Earned Income Tax Credit, Child/Child […]

Hope Policy Institute: Who Really Benefits: Why Large Tax Cuts Don’t Benefit Working Families and Communities

May 5, 2016

“Large tax reductions proposed at a time when Mississippi already is cutting important public investments due to a lack of revenue would erode the state’s ability to create jobs and have a competitive economy. Over the past two years major tax cut proposals have been proposed that would cut and flatten the state’s income tax […]

Louisiana Budget Project: The federal deduction needs reform

May 5, 2016

“There are two key questions confronting Louisiana officials as they grapple with the most serious budget crisis in a generation: How much new tax revenue does Louisiana need in order to maintain the critical services that citizens expect? And secondly – who should pay those extra taxes? As things stand, Louisianans as a whole are […]

news release  

ITEP Statement on Illinois Department of Revenue Analysis of House Bill 689

May 4, 2016 • By ITEP Staff

For Immediate Release: May 4, 2016   Contact: Jenice R. Robinson, 202.299.1066 X29, [email protected] Earlier today, the Illinois Department of Revenue (ILDOR) released an economic analysis of the tax changes included in House Bill 689, which would transform the state’s personal income tax from its current flat rate to a graduated-rate system. The following is […]

Connecticut Voices for Children: Impact of the Governor’s, Republican, and Democrat Proposed FY 2017 Budget on Children and Families

May 2, 2016

“Following hundreds of millions in dollars of cuts to health, human services and education to close a billion dollar budget hole in Fiscal Year 2016 (FY 16), lawmakers are once again facing tough choices as they prepare to close another billion dollar deficit for Fiscal Year 2017 (FY 17), all while staring down deficits of […]

Georgia Budget & Policy Institute: Georgia Work Credit Could Get Families a Better Deal at Tax Time

April 16, 2016

As Georgians put the finishing touches on their returns to meet today’s income tax filing deadline, one benefit many are missing out on is a tax credit that states can offer to help average families get a fair deal. Twenty-six states and the District of Columbia provide taxpayers with a state-level match for the Earned […]

Oklahoma Policy Institute: High-income surcharge would help solve budget emergency

April 15, 2016

“The evidence is now undeniable that Oklahoma is facing a full-fledged emergency. With each passing day, the toll of budget cuts on Oklahoma families, schools, businesses, and communities becomes more alarming. Given the enormity of the budget shortfall, it’s widely understood that the budget can’t be balanced primarily through deeper spending cuts. The income tax […]