Category: Personal Income Taxes
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Neva Butkus
State Policy AnalystMost state budgets are flush with cash due to billions in federal aid and a rebounding economy, positioning state policymakers to make transformative investments in programs, e.g. healthcare, education and infrastructure, that will help communities rebound from the ongoing pandemic. Unfortunately, most state legislatures are instead opting for premature, myopic tax cuts that will inevitably […] -
October 4, 2021
State Income Tax Reform Can Bring Us Closer to Racial Equity
The origins of the racial wealth gap are far from mysterious. A long history of injustices and exclusionary policies and social practices created an economic system that privileges wealth and perpetuates the historical advantages bestowed on white individuals and families. Ending these inequities will require a concerted effort across policy areas at all levels of […] -
Kamolika Das
State Policy AnalystMississippi lawmakers are holding two days of hearings this week on eliminating or cutting the individual income tax after similar proposals failed this spring. It’s difficult to understand the logic underpinning Mississippi’s current efforts to explore eliminating the individual income tax. History has repeatedly shown that such policies harm state economies, dismantle basic public services, […] -
Dylan Grundman O'Neill
Senior State Policy AnalystThis month, we watched billionaire space-racers with skyrocketing fortunes literally rocket themselves into the sky to look down on us from the largest gap they could put between themselves and the people, communities, and institutions that made their fortunes possible. These events have put an exclamation point on one of the clearest lessons to come […] -
Carl Davis
Research DirectorIn 2018, Arizona teachers took part in a national wave of teacher walkouts, protesting inadequate education funding and some of the lowest teacher pay in the nation—direct results of the state’s penchant for deep tax cuts and its decision to levy some of the lowest tax rates in the country on high-income families. -
Carl Davis
Research DirectorFebruary 24, 2021
Income Tax Discussion Continues in Alaska
Alaska is notoriously reliant on tax and royalty revenue from oil to fund vital public services and institutions, but declining oil prices and production levels have rendered those revenues inadequate to meet the state’s needs. ITEP analysis of potential state income tax options in Alaska shows the potential to raise between $526 million and $696 million per year yet are quite modest compared to personal income tax structures in other states. When measured relative to state residents’ incomes, any of these options would rank among the bottom five lowest state income taxes in the nation. -
Lisa Christensen Gee
Director of Special InitiativesThis November, Illinoisans will decide whether to amend the state constitution to allow a graduated income tax. A “yes” vote on the Illinois Fair Tax constitutional amendment will make effective legislation that will replace the current flat tax rate of 4.95 percent with graduated rates that cut taxes for those with taxable income less than $250,000 and institute higher marginal rates on taxable incomes greater than $250,000. -
Carl Davis
Research DirectorMarch 6, 2020
Talking Taxes in Alaska
Alaska’s tax system underwent major changes in the 1970s when oil was found at Prudhoe Bay. Lawmakers repealed the state’s personal income tax (making Alaska the only state ever to do so) and began balancing the state’s budget primarily with oil tax and royalty revenue instead. But as oil prices and production levels have declined, a yawning gap has opened between state revenues and the cost of providing vital public services. -
Carl Davis
Research DirectorItemized deductions are problematic tax subsidies that need to close. The mortgage interest deduction, for instance, is often lauded as a way to help middle-class families afford homes and charitable deductions are touted as incentivizing gifts to charitable organizations. But the dirty little secret is that itemized deductions primarily benefit higher-income households while largely failing to achieve their purported goals. -
September 26, 2019
Maine Reaches Tax Fairness Milestone
Lawmakers in Maine this year took bold steps toward making the state’s tax system fairer. Their actions demonstrate that political will can dramatically alter state tax policy landscape to improve economic well-being for low-income families while also ensuring the wealthy pay a fairer share. -
Aidan Davis
Senior State Policy AnalystState and local tax systems in 45 states worsen income inequality by making incomes more unequal after taxes. The worst among these are identified in ITEP’s Terrible 10. Washington, Texas, Florida, South Dakota, Nevada, Tennessee, Pennsylvania, Illinois, Oklahoma, and Wyoming hold the dubious honor of having the most regressive state and local tax systems in the nation. These states ask far more of their lower- and middle-income residents than of their wealthiest taxpayers. -
Aidan Davis
Senior State Policy AnalystOnce again, public school teachers are taking a stand for education and against irresponsible, top-heavy tax cuts that deprive states of the revenue they need to sufficiently fund public services, including education. -
Aidan Davis
Senior State Policy AnalystToday marks Day 4 of the Arizona teachers’ walkout. After decades of tax cuts and underfunding of public education, education advocates are now driving the debate and urging lawmakers to act. Their newest proposal would raise taxes on incomes above half a million dollars for married couples, or above $250,000 for single taxpayers—that is, the same wealthy taxpayers that just received a generous tax cuts under last year’s federal tax overhaul. -
July 24, 2017
Sound Tax Policy Made a Comeback in 2017
2017 marked a sea change in state tax policy and a stark departure from the current federal tax debate as dubious supply-side economic theories began to lose their grip on statehouses. Compared to the predominant trend in recent years of emphasizing top-heavy income tax cuts and shifting to more regressive consumption taxes in the hopes […] -
Lisa Christensen Gee
Director of Special InitiativesJune 13, 2017
How to Recover from A Failed Tax Experiment: Part 1
Gov. Sam Brownback’s tax experiment in Kansas was a failure. His radical tax cuts for the rich eventually had to be partly paid for through tax hikes on low- and middle-income families and also failed to deliver on promises of economic growth. Meanwhile, the tax cuts decimated the state’s budget, diminished its credit rating, and compromised its ability to meet the state’s constitutional standard of adequacy for public education. -
Carl Davis
Research DirectorA new report by the Institute on Taxation and Economic Policy (ITEP) and AASA, the School Superintendents Association, details how tax subsidies that funnel money toward private schools are being used as profitable tax shelters by high-income taxpayers. By exploiting interactions between federal and state tax law, high-income taxpayers in nine states are currently able […] -
Dylan Grundman O'Neill
Senior State Policy AnalystNebraska lawmakers had a long and contentious tax-cut debate this session but ultimately chose the wise path and rejected attempts to give a massive tax cut to the wealthy at the expense of the state’s schools, other public services, low- and middle-income families, and property tax payers. Tax cut efforts in Nebraska last year ended […] -
Dylan Grundman O'Neill
Senior State Policy AnalystThree of the biggest needs facing state policymakers right now are new revenues to fund their priorities in the face of budget shortfalls and federal funding cuts, ways to insulate those revenue streams from unpredictable tax changes at the federal level, and approaches to meet these needs without leaning even more heavily on low- and […] -
Carl Davis
Research DirectorApril 25, 2017
Income Tax Offers Best Bang for the Buck in Alaska
Earlier this month the Alaska House of Representatives voted 22-17 in favor of implementing a personal income tax for the first time in over 35 years. Gov. Bill Walker praised the bill shortly after passage, citing its ability to “provide a steady source of funding for essential services like public education and state troopers,” and […] -
Carl Davis
Research DirectorThe most challenging problem that tax-cutting state lawmakers face is dealing with the budgetary tradeoffs that tax cuts require. Should education spending be reduced? Should investments in infrastructure be halted? Should the state cut back on transfers to local governments and require them to pick up the slack? Or should other taxes and fees be […] -
Aidan Davis
Senior State Policy AnalystThis is the third installment of our six-part series on 2017 state tax trends. The introduction to this series is available here. As we described last week, many states are gearing up for challenging budget debates this year. But the need to address revenue shortfalls has not stopped lawmakers in many states from pursuing harmful […]
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