Personal Income Taxes
The personal income tax is typically the fairest revenue source relied on by federal and state governments. A properly structured personal income tax could offer an important boost in progressivity to what are otherwise overwhelmingly regressive state tax structures.
Forty-one states and the District of Columbia levy broad-based personal income taxes. ITEP’s personal income tax resources provide both general and state-specific information about the impact as well as the mechanics and merits of personal income taxes.
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report August 23, 2018 ITEP Testimony “Regarding the Final Report of the Arkansas Tax Reform and Relief Legislative Task Force”
Read the testimony in PDF WRITTEN TESTIMONY SUBMITTED TO: THE ARKANSAS TAX REFORM AND RELIEF TASK FORCE Lisa Christensen Gree, Senior State Tax Policy Analyst Institute on Taxation and Economic Policy… -
blog May 21, 2018 Debate Over New Jersey’s Millionaires and ITEP’s Data
New Jersey’s new governor, Phil Murphy campaigned on a promise to raise state income taxes on millionaires, a proposal that is supported by 70 percent of the state and was, until recently, backed by New Jersey’s Senate President, Steve Sweeney. In recent months, Sweeney changed his position on the proposed millionaires tax and called for an increase in New Jersey’s corporate tax instead. The idea of hiking taxes on corporations is not a bad one, particularly since corporations received a windfall from the Tax Cuts and Jobs Act. But Sweeney’s new opposition to an income tax hike for the state’s richest residents seems to be based on an erroneous reading of ITEP’s data.
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blog May 15, 2018 NC Teachers’ March on Raleigh and the Tax Cuts that Led Them There
Once 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.
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blog May 1, 2018 Newly Unveiled Ballot Initiative Aims to Tax Arizona’s Top 1 Percent to Fund Education
Today 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.
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report October 26, 2017 Trickle-Down Dries Up: States without personal income taxes lag behind states with the highest top tax rates
Lawmakers who support reducing or eliminating state personal income taxes typically claim that doing so will spur economic growth. Often, this claim is accompanied by the assertion that states without income taxes are booming, and that their success could be replicated by any state that abandons its income tax. To help evaluate these arguments, this study compares the economic performance of the nine states without broad-based personal income taxes to their mirror opposites—the nine states levying the highest top marginal personal income tax rates throughout the last decade.
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report September 14, 2017 State Tax Codes as Poverty Fighting Tools
Astonishingly, tax policies in virtually every state make it harder for those living in poverty to make ends meet. When all the taxes imposed by state and local governments are taken into account, every state imposes higher effective tax rates on poor families than on the richest taxpayers.
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blog 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… -
ITEP Work in Action June 21, 2017 Failed Tax-Cut Experiment (in North Carolina) Will Continue Under Final Budget Agreement, Pushes Fiscal Reckoning Down the Line
The final budget agreement from leaders of the House and Senate puts North Carolina on precarious fiscal footing, The tax changes that leaders agreed to—which were less a compromise and more of a decision to combine the tax cuts in both chambers’ proposals—make the cost of these tax cuts bigger than what either chamber proposed. Including the new tax cuts,approximately 80 percent of the net tax cut since 2013 will have gone to the top 20 percent. More than half of the net tax cut will go to the top 1 percent.
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blog June 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.
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ITEP Work in Action May 26, 2017 The Cost Of Trickle-Down Economics For North Carolina
Since 2013, state lawmakers have passed significant income tax cuts that largely benefit the state’s highest income earners and profitable corporations. These costly tax cuts have made the state’s tax… -
blog May 17, 2017 Investors and Corporations Would Profit from a Federal Private School Voucher Tax Credit
A 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… -
report May 17, 2017 Public Loss Private Gain: How School Voucher Tax Shelters Undermine Public Education
One of the most important functions of government is to maintain a high-quality public education system. In many states, however, this objective is being undermined by tax policies that redirect public dollars for K-12 education toward private schools.
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blog May 4, 2017 Nebraska Vote Is Latest Defeat for Tax-Cut “Trigger” Gimmick
Nebraska 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… -
blog May 1, 2017 Time to Repeal State Deductions for Federal Income Taxes
Three 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… -
brief May 1, 2017 Why States That Offer the Deduction for Federal Income Taxes Paid Get It Wrong
With many states currently facing budget shortfalls—whether due to weak economic recovery after the Great Recession, struggling commodity prices, or self-inflicted tax cuts—and all states bracing for possible federal budget cuts in areas from education to health care to infrastructure, states are unlikely to be able to continue providing high-quality services to their residents without raising new revenue. In this context, states must find ways to generate additional revenue without increasing taxes on individuals and families who are already struggling to make ends meet and may bear the biggest brunt of federal funding cuts.
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blog April 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… -
blog February 6, 2017 Dodging Tough Fiscal Decisions with State Tax Cut Triggers and Phase-Ins
The 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?… -
blog February 2, 2017 What to Watch in the States: Further Attempts to Weaken or Eliminate Progressive Taxes
This 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… -
brief November 28, 2016 State Tax Preferences for Elderly Taxpayers
State governments provide a wide array of tax breaks for their elderly residents. Almost every state that levies an income tax allows some form of income tax exemption or credit for citizens over age 65 that is unavailable to non-elderly taxpayers. Most states also provide special property tax breaks to the elderly. Unfortunately, too many of these breaks are poorly-targeted, unsustainable, and unfair. This policy brief surveys federal and state approaches to reducing taxes for older adults and suggests options for designing less costly and better targeted tax breaks.
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brief September 14, 2016 Reducing the Cost of Child Care Through State Tax Codes
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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brief August 22, 2016 Indexing Income Taxes for Inflation: Why It Matters
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… -
brief August 17, 2016 The Folly of State Capital Gains Tax Cuts
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… -
report July 12, 2016 Income Tax Offers Alaska a Brighter Fiscal Future
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… -
brief June 2, 2016 State Treatment of Itemized Deductions
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… -
report April 13, 2016 Distributional Analyses of Revenue Options for Alaska
Alaskans are faced with a stark fiscal reality. Following the discovery of oil in the 1960s and 1970s, state lawmakers repealed their personal income tax and began funding government primarily through oil tax and royalty revenues. For decades, oil revenues filled roughly 90 percent of the state’s general fund.