Institute on Taxation and Economic Policy

ITEP's Research Priorities

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Illinois Must Ignore CME’s Tax Tantrum

June 16, 2011 • By Matthew Gardner

How much is enough? On top of the close to $500 million in corporate tax breaks Illinois doles out each year, Governor Pat Quinn now finds himself confronted by a growing crowd of CEO’s demanding even more. In the wake of tax-break lobbying efforts by Motorola, Sears and Caterpillar, the latest corporation seeking preferential tax […]

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ITEP’s Testimony on Combined Reporting Legislation

May 19, 2011 • By ITEP Staff

My testimony today examines the erosion of Rhode Island’s corporate income tax, and the multistate tax avoidance schemes that have contributed to this erosion. In addition, it discusses the single best strategy available to lawmakers seeking to respond to the problem of corporate tax avoidance—mandatory combined reporting. Requiring combined reporting of the income of multistate […]

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ITEP’s Testimony on Tax Expenditure Procedural Reform

May 19, 2011 • By Carl Davis

My testimony today focuses on House Bill 5737, which would enact a variety of reforms designed to enhance the level of scrutiny applied to new tax credits, deductions, exemptions, and exclusions. This testimony emphasizes how these reforms would help remove counterproductive biases in favor of relying too heavily on tax preferences; how similar reforms have […]

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Connecticut Takes a Stand for Progressive Tax Policy and a Balanced Budget Approach

May 14, 2011 • By Meg Wiehe

Five months into 2011, a glimmer of hope for progressive tax policy and a balanced, sensible approach to state budget woes has emerged in Connecticut. Lawmakers in all but a handful of states are continuing to grapple with historic budget shortfalls as they craft and finalize their budget plans for next year. State revenues continue […]

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States Should Not Allow Amazon.com to Bully Them into Forgoing Sales Tax Reform

April 14, 2011 • By Carl Davis

In just the last few weeks, Arkansas and Illinois joined New York, North Carolina, and Rhode Island in enacting legislation requiring some online retailers, like Amazon.com, to collect sales taxes on purchases made by their state’s residents. Vermont’s House of Representatives recently passed similar legislation, and Arizona, California, Connecticut, Hawaii, Massachusetts, Minnesota, Mississippi, Missouri, New […]

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ITEP’s Testimony on Sales Tax Modernization Proposal

April 13, 2011 • By Meg Wiehe

My testimony focuses on Governor Chafee’s Sales Tax Modernization Proposal, which would generally broaden Rhode Island’s sales tax base, lower the general state sales tax rate, and raise additional revenue to help mitigate budget cuts. In particular, my testimony will provide thoughts on two components of the governor’s proposal: adding a mix of services to […]

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Don’t Give Up on Pease: States Can Decouple from Recent Federal Tax Cuts for Wealthy Itemizers

April 10, 2011 • By Meg Wiehe

In 2011, thirty one states and the District of Columbia allow a group of income tax breaks known as “itemized deductions” (Figure 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 contributions, extraordinary medical expenses, mortgage interest payments and state […]

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In It for the Long Haul: Why Concerns over Personal Income Tax “Volatility” Are Overblown

March 31, 2011 • By Matthew Gardner

The precipitous drop in state tax collections during the recent recession has prompted some observers to argue that relying on volatile state taxes is a recipe for budgetary disaster. The most recent version of this argument, made by the Wall Street Journal’s Robert Frank, suggests that the personal income tax in particular is highly volatile, […]

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Should Illinois Tax Retirement Income?

March 24, 2011 • By Matthew Gardner

Earlier this month, Illinois Senate President John Cullerton suggested that limiting the state’s generous income tax break for retirement income “would just be a matter of fairness.” Senator Cullerton’s suggestion gives Illinois policymakers a welcome opportunity to reflect on the appropriate design of senior-citizen income tax relief in Illinois. This paper summarizes the mechanisms used […]

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ITEP’s Testimony on EITC Legislation

March 16, 2011 • By ITEP Staff

My testimony focuses on House Bill 581, which would create a Missouri Earned Income Tax Credit (EITC). In particular, my testimony will discuss the impact of this bill on the overall fairness of Missouri’s tax system. Read the Full Report (PDF)

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Topsy-Turvy: State Income Tax Deductions for Federal Income Taxes Turn Tax Fairness on its Head

March 10, 2011 • By Carl Davis, Meg Wiehe

The budget outlook for state governments is bleak. Despite evidence that revenues are rebounding, there is a general acknowledgement that ?broad fiscal conditions remain fragile. The need for public investments—particularly health care for low-wage or unemployed workers and their families—is greater than ever. An increasing number of states are struggling to keep their fiscal year […]

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Five Reasons to Reinstate Maryland’s “Millionaires’ Tax”

March 9, 2011 • By Carl Davis

In 2008, Maryland enacted a temporary change to its income tax in order to compensate for revenue lost from repealing a law subjecting computer services to the state’s sales tax. The income tax change in question, which expired at the end of 2010, created a new top income tax bracket with a rate of 6.25 […]

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The ITEP Guide to Fair State and Local Taxes

March 3, 2011 • By Carl Davis, Matthew Gardner, Meg Wiehe

The ITEP Guide to Fair State and Local Taxes, released in March of 2011, offers citizens, activists, journalists, and policymakers a detailed primer on state and local tax policy. The guide explains the differences between progressive, flat, and regressive taxes — and why you should care. It covers the full range of taxes that states […]

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A Capital Idea

January 15, 2011 • By Carl Davis, Meg Wiehe

The budget outlook for the states is improving, but uncertain. In this context, states must find ways to generate additional revenue that create neither additional responsibilities for individuals and families struggling to make ends meet nor additional distortions in the economy as a whole. For eight states – Arkansas, Hawaii, Montana, New Mexico, North Dakota, […]

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Dear Wall Street Journal: No Need to File a Missing Persons Report, Oregon’s High-Income Taxpayers Have Not “Vanished”

December 22, 2010 • By Carl Davis

The Wall Street Journal recently published an editorial suggesting that a 2 percentage point increase in Oregon’s top income tax rate caused up to 10,000 wealthy Oregonians to flee the  state. In support of its claim, the Journal points to new data showing that 10,000 fewer Oregonians were affected by this tax increase than the […]

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How the Bush Tax Cuts Affect State Revenues

December 15, 2010 • By Matthew Gardner

Less than one month from now, federal tax cuts pushed through by President George W. Bush are scheduled to expire—and Congressional tax writers have spent much of this year debating how these tax cuts should be extended. This debate has huge implications for the nation’s fiscal health, but also has often-overlooked implications for state revenues. […]

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The Good, the Bad and the Ugly: 2010 State Tax Policy Changes

December 15, 2010 • By Carl Davis, Meg Wiehe

Compared to previous years, the budget outlook for the states improved only slightly in 2010 and virtually every state continued to face a budget shortfall. As a result, the overwhelming majority of state policymakers were put in the unenviable position of having to address some very difficult budgetary issues. Lawmakers were forced to make the […]

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Testimony before the Maryland Business Tax Commission: Combined Reporting

November 9, 2010 • By Carl Davis

I’m here to talk about combined reporting, which ITEP views as a vital step towards ensuring the vitality of the Maryland corporate income tax going forward.  I’d like to use my allotted time to discuss one important policy choice that Maryland policymakers must make in implementing combined reporting. Read the Full Report (PDF)  

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Census Data Reveal Washington’s Fundamental Tax Mismatch: Washington is a Low Tax State, But Not for Families Living in Poverty

September 15, 2010 • By Meg Wiehe

Recently released data from the Census Bureau confirms that overall Washington could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Washington as a low tax state — instead, they pay more than their fair share of state and local taxes.. Read the Full Report […]

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Census Data Reveal Texas’ Fundamental Tax Mismatch: Texas is a Low Tax State, But Not for Families Living in Poverty

September 15, 2010 • By Meg Wiehe

Recently released data from the Census Bureau confirms that overall Texas could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Texas as a low tax state — instead, they pay more than their fair share of state and local taxes. Read the Full Report […]

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Census Data Reveal Tennessee’s Fundamental Tax Mismatch: Tennessee is a Low Tax State, But Not for Families Living in Poverty

September 15, 2010 • By Meg Wiehe

Recently released data from the Census Bureau confirms that overall, Tennessee could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Tennessee as a low tax state — instead, they pay more than their fair share of state and local taxes. Read the Full Report […]

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Census Data Reveal Florida’s Fundamental Tax Mismatch: Florida is a Low Tax State, But Not for Families Living in Poverty

September 15, 2010 • By Meg Wiehe

Recently released data from the Census Bureau confirms that overall, Florida could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Florida as a low tax state — instead, they pay more than their fair share of state and local taxes. Read the Full Report […]

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Census Data Reveal Arkansas Fundamental Tax Mismatch: Arkansas is a Low Tax State, But Not for Families Living in Poverty

September 15, 2010 • By Meg Wiehe

Recently released data from the Census Bureau confirms that overall, Arkansas could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Arkansas as a low tax state — instead, they pay more than their fair share of state and local taxes. Read the Full Report […]

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Census Data Reveal Arizona’s Fundamental Tax Mismatch: Arizona is a Low Tax State, But Not for Families Living in Poverty

September 15, 2010 • By Meg Wiehe

Recently released data from the Census Bureau confirms that overall Arizona could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Arizona as a low tax state — instead, they pay more than their fair share of state and  local taxes.   Read the Full […]

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Credit Where Credit is (Over) Due: Four State Tax Policies Could Lessen the Effect that State Tax Systems Have in Exacerbating Poverty

September 15, 2010 • By Meg Wiehe

The ongoing recession has had an unrelenting impact on families and communities in every state across the country. Millions of Americans are without work and in many cases those with jobs are experiencing reduced work hours and wages. New poverty figures from the US Census suggest that the road to economic security will be a […]