Category: State Policy

Policymakers and residents in all 50 states and the District of Columbia got new ITEP data this week on how their tax structures and decisions affect their high-, middle-, and low-income residents. As our “Who Pays?” report outlines, most state and local tax codes exacerbate economic inequalities and all states have room to improve. The data can serve as an important informative backdrop to all state and local tax policy debates, such as whether to change the valuation of commercial property in California, how to improve funding for early childhood education in Indiana, and how to evaluate tax-related ballot measures around the nation.

Voters all around the country are educating themselves for the upcoming elections, notably this week around ballot initiatives in Arizona and Colorado and competing gubernatorial tax proposals in Georgia and Illinois. But not all eyes are on the elections, as the relationship between state and local policy made news in Delaware, Idaho, North Dakota, and Ohio.

South Carolina lawmakers have finally passed a federal conformity bill in response to last year’s federal tax-cut legislation. Voters in many states are hearing a lot about tax-related questions they’ll see on the ballot in November, particularly residents of Florida, Montana, and Oregon, where corporate donors and other anti-tax interests are spending major sums to alter policy in their states. And states continue to work on ensuring they can collect online sales taxes and, in some states, online sports betting taxes.

Affordable housing efforts made news in Minnesota and Virginia this week, as tax breaks for homeowners and other victims of Hurricane Florence were made available in multiple states. Meanwhile, New Jersey is still looking into legalizing and taxing cannabis, and Wyoming continues to consider a corporate income tax. And gubernatorial candidates and ballot initiative efforts will give voters in many states much to consider in the November elections.

The Rundown is back after a few-week hiatus, with lots of state fiscal news and quality research to share! Maine lawmakers found agreement on a response to the federal tax-cut bill, states continue to sort out how they’ll collect online sales taxes in the wake of the Wayfair decision, and policymakers in several states have been working on summer tax studies and other preparations for 2019 legislative sessions. Meanwhile, work on ballot measures and candidate tax plans to go before voters in November has been even more active, particularly in Arizona, California, Florida, Hawaii, and Missouri. Our “What We’re Reading” section has lots of great research and reading on inequalities, cities turning to regressive fees, states’ preparations for the next recession, and much more. And we at ITEP have been hard at work during this Rundown hiatus as well, updating our most key resources on the upside-down nature of state and local taxes and how states can work to improve them; we’re saving some of the best for later, but see below for an update on some what we’ve been working on. 

Arizona voters learned this week that they will have an opportunity this fall to restore school funding through a progressive tax measure. The effects of the Supreme Court’s Wayfair decision could soon be seen on Michigan and Mississippi roads, as leaders in both states have proposed devoting new online sales tax revenues to infrastructure needs. And new research highlighted in our “What We’re Reading” section discredits one-size-fits-all prescriptions for state economic growth such as supply-side tax-cut orthodoxy, advocating instead for more nuanced and state-specific policymaking.

Even as the haze from western wildfires reduced visibility across the nation this week, voters got more clarity on what to expect to see on their ballots this fall, particularly in California (commercial property taxes and corporate surcharges), Colorado (income taxes for education), Missouri (gas tax update), and North Dakota (recreational cannabis). Meanwhile, although Virginia lawmakers won’t return until 2019, they got a preview of a clear-headed federal conformity plan they should strongly consider. And look to our “What We’re Reading“ section for further enlightenment from researchers on the [in]effectiveness of charitable contribution credits, the [lack of] wage growth for America’s workers, and what [a few] states are doing to prepare for the inevitable next recession.

August is often a season for states to define the parameters of tax debates to come, and that is true this week in several states: a tax task force in Arkansas is nearing its final recommendations; residents of Missouri, Montana, and North Carolina await results of court challenges that will decide whether tax measures will show up on their ballots this fall; and Michigan and South Dakota are taking different approaches to making sure they’re ready to collect online sales taxes next year.

Although most state legislatures are out of session during the summer, the pursuit of better fiscal policy has no "off-season." Here at ITEP, we've been revamping the State Rundown to bring you your favorite summary of state budget and tax news in the new-and-improved format you see here. Meanwhile, leaders in Massachusetts and New Jersey have been hard at work in recent weeks and are already looking ahead their next round of budget and tax debates. Lawmakers in many states are using their summer break to prepare for next year's discussions over how to implement online sales tax legislation. And ballot initiative campaigns are active as well, including in Arizona, Colorado, and Montana.

In the wake of the U.S. Supreme Court's recent Wayfair decision authorizing states to collect taxes owed on online sales, Utah lawmakers held a one-day special session that included (among other tax topics) legislation to ensure the state will be ready to collect those taxes, and a Nebraska lawmaker began pushing for a special session for the same reason. Voters in Colorado and Montana got more clarity on tax-related items they'll see on the ballot in November. And Massachusetts moves closer toward becoming the final state to enact a budget for the new fiscal year that started July 1 in most states.

New Jersey avoided a second consecutive shutdown and proved that even against staunch opposition, progressive solutions to states' fiscal issues are attainable, and Arizona voters will likely have a chance to solve their education funding crisis in a similar way. Budget and tax debates remain to be resolved, however, in Maine and Massachusetts. Meanwhile, voters are gaining a clearer picture of what questions they will be asked on ballots this fall as signature drives conclude in several states.

This week, lawmakers in Louisiana, Pennsylvania, Rhode Island, Vermont, and the District of Columbia wrapped up their budgets in time for the new fiscal year that starts July first in most states, with some of these resolutions coming after contentious debates and repeated special sessions. New Jersey's debate is not yet finished as leaders clash over spending priorities and the taxes on millionaires and corporations needed to fund them. Meanwhile, signature drives to put tax-related questions on fall ballots are heating up in several other states. And our "What We're Reading" section includes helpful resources on implications of the Supreme Court's Wayfair online sales tax decision last week.

The U.S. Supreme Court made big news this morning by allowing states to collect taxes due on internet purchases, which will help put main-street and online retailers on an even playing field while also improving state and local revenues and the long-term viability of the sales tax as a revenue source. Many states remain focused on more local issues, however, as Louisiana's third special session of the year kicked off, Massachusetts won a living wage battle while losing an opportunity to put a popular millionaires tax proposal before voters, and major fiscal debates continue in Maine, New Jersey, and Vermont.

With many state fiscal years ending June 30th, budget negotiations were completed recently in California, Illinois, Michigan, and North Carolina. New Jersey remains a state to watch as a government shutdown looms but leaders continue to disagree about a proposed millionaires tax, corporate taxes, and school funding. In other states looking to wealthy individuals and large corporations for needed revenues, Arizona's teacher pay crisis could be solved with a tax on its highest-income residents and a similar proposal in Massachusetts is polling well, but Seattle's new "head tax" could be on the chopping block.

This week, Virginia lawmakers overcame their budget impasse and approved an expansion of Medicaid, North Carolina's behind closed doors budget debate appears to be wrapping up, and Vermont's special session continues in the wake of the governor's vetoes of the state budget and accompanying tax bills. New research highlighted in our What We're Reading section shows that both corporate income tax cuts and business tax subsidies contribute to wider economic inequality. And the possible reconstitution of a federal commission on intergovernmental relations could not come soon enough, as other headlines this week include a state-to-local shift in school funding, governments turning to the gig economy for staffing and revenue needs, and state-federal tensions heating up as the IRS cracks down on gimmicks designed to evade the $10,000 cap on the federal deduction for state and local taxes.

This week the governors of Louisiana and Minnesota both vetoed budget bills, leading to another special session in Louisiana and unanswered questions in Minnesota, and Missouri legislators managed to push through a tax shift bill just before adjourning their regular session and heading right into a special session to impeach their governor. Wisconsin and Wyoming localities are both looking at ways to raise revenues as state funding drops. And our What We're Reading section contains helpful pieces on changing demographics, the effects of wealth inequality on families with children, and the impacts of the Supreme Court sports gambling and online sales tax cases.

This week the U.S. Supreme Court opened the door to legal sports gambling in the states (see our What We're Reading section), which will surely be a hot topic in state legislative chambers, but most states currently have more pressing matters before them. The teacher pay crisis made news in North Carolina, Alabama, and nationally. Louisiana, Oregon, and Vermont lawmakers are headed for special sessions over tax and budget issues. And several other states have recently reached or are very near the end of their legislative sessions. 

This week we have news of a destructive tax cut plan finally approved in Iowa just as one was narrowly avoided in Kansas. Tax debates in Minnesota and Missouri will go down to the wire. And residents of Arizona and Colorado are considering progressive revenue solutions to their states' education funding crises.

This week, Arizona teachers continued to strike over pay issues and advocates unveiled a progressive revenue solution they hope to put before voters, while a progressive income tax also gained support as part of a resolution to Illinois's budget troubles. Iowa and Missouri legislators continued to try to push through unsustainable tax cuts before their sessions end. And Minnesota and South Carolina focused on responding to the federal tax-cut bill.

This Arbor Day week, the seeds of discontent with underfunded school systems and underpaid teachers continued to spread, with walkouts occurring in both Arizona and Colorado. And recognizing the need to see the forest as well as the trees, the Arizona teachers have presented revenue solutions to get to the true root of the problem. In the plains states, tax cut proposals continue to pop up like weeds in Kansas and threaten to spread to Iowa and Missouri, where lawmakers are running out of time but are still hoping their efforts to pass destructive tax cuts will bear fruit.

This week the IRS website asked some would-be tax filers to return after December 31, 9999. State legislators don't have quite that much time, but are struggling to wrap up their tax debates on schedule as well. Iowa legislators, for example, are ironically still debating tax cuts despite having run out of money to cover their daily expenses for the year. Nebraska's session wrapped up, but its tax debate continues in the form of a call for a special session and the threat of an unfunded tax cut going before voters in November. Mississippi's tax debate has been revived by emergency bridge closings. Kentucky's session went down to the wire as lawmakers overrode vetoes to push through a tax increase to help fund teacher salaries that raises taxes on most taxpayers while cutting them for the richest 5 percent tax. And lawmakers in Arizona and Colorado may need to stay after school to resolve teacher pay issues.

This Friday the 13th is a spooky one for many state lawmakers, as past bad fiscal decisions have been coming back to haunt them in the form of teacher strikes and walk-outs in Arizona, Kentucky, and Oklahoma. Meanwhile, policymakers in Maryland, Nebraska, New Jersey, Oregon, and Utah all attempted to exorcise negative consequences of the federal tax-cut bill from their tax codes. And our What We're Reading section includes yet another stake to the heart of the millionaire tax-flight myth and other good reads.

This week, Kentucky legislators passed a bill shifting taxes onto low- and middle-income families, Oklahoma legislators reached a deal on education funding, and their counterparts in Kansas proffered multiple proposals for their education funding needs. Meanwhile, tax debates are coming down to the wire in Iowa, Missouri, and Nebraska, and responses to the federal tax-cut bill were settled on in Maryland, New York, and Wisconsin.