Category: State Policy

Over the last couple of weeks, leaders in Kansas and Missouri reached a historic agreement to stop giving away tax subsidies just to entice companies a couple of miles across their shared state line. Meanwhile, policymakers in Alaska resolved a stand-off over education funding...by cutting education funding slightly less. And California voters may be voting in 2020 on a stronger reform to the notoriously inequitable property tax effects of “Proposition 13.”

We've said it before, and we'll say it again: states don't have to wait for federal lawmakers to make moves toward progressive tax policy. And so far, 2019 has been a good year for equitable and sustainable tax policy in the states. With July 1 marking the start of a new fiscal year for most states, this special edition of the Rundown looks at how discussions in 2019 have been dominated by plans to raise revenue for vital investments, tax the rich and corporations fairly, use the tax code to help workers and families and advance racial equity, and shore up revenues for infrastructure.

Low-income working families got good news and bad news this week, as Earned Income Tax Credit (EITC) enhancements passed in California and advanced in Oregon, while minimum wage increases failed in Pennsylvania, Rhode Island, and Wisconsin. Meanwhile, the momentum for taxing wealth and the very rich continued to grow, as more one-percenters called for enacting progressive taxes, and Inequality.org held a star-studded conference on why and how to do so.

This week saw lawmakers in Ohio propose significant harmful tax cuts, leaders in California and Oregon work toward strengthening the state Earned Income Tax Credits (EITCs), and governors in Missouri and Kansas declare a truce to end the practice of bribing businesses in the Kansas City area with tax cuts to move from one side of the state line to the other. Meanwhile, Massachusetts leaders are discussing ways of raising taxes on their richest households, which our latest Just Taxes blog post notes is a promising trend this year across many states.

Illinois made big news in several tax and budget areas recently, including sending a graduated income tax amendment to voters in 2020, as well as legalizing and taxing cannabis and updating gas and cigarette taxes for infrastructure improvements. Connecticut made smaller waves with sales tax reforms, a plastic bag tax, and a progressive mansion tax. Property tax credits were proposed in both Maine and New Jersey. And Nevada extended a business tax to give teachers a raise. And our What We’re Reading section is brimming with good reads on how states are doing with recovering from the Great Recession, funding education, using cannabis tax revenues, and improving Earned Income Tax Credits (EITCs).

Like certain recent controversially concluded television shows, tax and budget debates can end in many ways and often receive mixed reviews. Illinois leaders, for example, ended on a cliffhanger by approving a historic constitutional amendment to create a graduated income tax in the state, whose ultimate conclusion will be crowdsourced by voters next November. Arizona’s fiscal finale fell flat with many observers due to corner-cutting on needed investments and a heavy focus on tax cuts. Texas legislators went for crowd-pleasing property tax cuts and school funding increases but left a gigantic “but how will we pay for this” plot hole in their script. And after appearing ready to conclude after countless seasons, Nebraska lawmakers left their school funding, tax reform, and business tax break storylines on the cutting room floor to be picked up for yet another season next year.

Lawmakers and advocates can enjoy their barbeques with only one eye on their work email this weekend in states that have essentially finished their budget debates such as Alaska, Minnesota, Nebraska, and Oklahoma, though both Alaska and Minnesota require special sessions to wrap things up. Getting to those barbeques may be a bumpy ride in Louisiana, Michigan, and other states still working to modernize outdated and inadequate gas taxes.

Tax and budget negotiations remain at standstills in Louisiana and Minnesota, as school funding debates and teacher protests again captured headlines in several states. Oregon lawmakers, for example, finally passed a mixed-bag tax package that won’t improve tax equity but will raise much-needed revenue for education. Meanwhile their counterparts in Nebraska continue to debate highly […]

Lawmakers in Illinois and Ohio have advanced major tax proposals but cannot rest just yet, as they must still get past the other legislative chamber. Their counterparts in Michigan, Minnesota, Nebraska, and Oregon, meanwhile, are all at impasses over education funding, as those in Texas left their school funding disagreement unresolved at least until they reconvene...in 2021. And in an era of many states pre-empting smaller jurisdictions by revoking local decision-making powers, leaders in Colorado and Delaware made moves in the opposite direction, entrusting cities and school districts with more local control.

Teachers in North Carolina and South Carolina are walking out and rallying this week for increased education funding, teacher and staff pay, and other improvements to benefit students—if you’re unsure why be sure to check out research on the teacher shortage and pay gap under “What We’re Reading” below. Meanwhile, budget debates have recently wrapped up in Indiana, Iowa, Massachusetts, New Hampshire, and Washington. And major tax debates are kicking into high gear in both Louisiana and Nebraska.

Progressive capital gains tax proposals made news this week in Connecticut and Massachusetts, while Nebraskans came out in force to oppose a regressive tax shift, and North Carolina teachers prepare to rally over their legislature’s proclivity to cut taxes on wealthy households while underfunding schools.