Lawmakers in many states have enacted “sales tax holidays” (at least 17 states will hold them in 2015), to provide a temporary break on paying the tax on purchases of clothing, computers and other items. While these holidays may seem to lessen the regressive impacts of the sales tax, their benefits are minimal. This policy brief examines the many problems associated with sales tax holidays and concludes that they have more political than policy benefits.
Publications
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brief July 22, 2015 Sales Tax Holidays: An Ineffective Alternative to Real Sales Tax Reform
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brief June 24, 2015 Pay-Per-Mile Tax is Only a Partial Fix
Read this report in PDF form Introduction For years, academics and transportation experts have been discussing the possibility of taxing drivers for each mile they travel on the nation’s roads. … -
report June 17, 2015 Testimony: Adding Sustainability to the Highway Trust Fund
The federal Highway Trust Fund (HTF) is the single most important mechanism for funding maintenance and improvements to the nation’s transportation infrastructure. Absent Congressional action, however, the HTF will face insolvency at the end of July. Unfortunately, despite the critical importance of infrastructure to the U.S. economy, the condition of the HTF has been allowed to deteriorate to the point that imminent insolvency has become entirely normal.
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report May 6, 2015 Issues with Taxing Marijuana at the State Level
Read as a PDF. Table of Contents Introduction Why Tax Marijuana? Designing a State Tax on Marijuana How Much Revenue Would Marijuana Legalization Generate for States Factors that Could Negatively… -
report April 15, 2015 Undocumented Immigrants’ State & Local Tax Contributions (2015)
This report was updated February 2016 Read as a PDF. (Includes Full Appendix of State-by-State Data) Report Landing Page In the public debates over federal immigration reform, sufficient and accurate information… -
brief March 23, 2015 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 now allows some form of income tax exemption or credit for citizens over age 65 that is unavailable to non-elderly taxpayers. And most states 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 for elderly taxpayers.
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report February 16, 2015 Most Americans Live in States with Variable-Rate Gas Taxes
The federal government and many states are seeing shortfalls in their transportation budgets in part because the gasoline taxes they use to generate those funds are poorly designed. Thirty-one states and the federal government levy “fixed-rate” gas taxes where the tax rate does not change even as the cost of infrastructure materials inevitably increases over time. The federal government’s 18.4 cent gas tax, for example, has not increased in over 22 years. And twenty states have gone a decade or more without a gas tax increase.
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report February 10, 2015 How Long Has it Been Since Your State Raised Its Gas Tax?
An updated version of this report has been published with data through July 1, 2017. Read the report in PDF form. Many states’ transportation budgets are in disarray, in part… -
report February 5, 2015 Grocery Tax Exemption Is No Improvement for Idaho
Read as a PDF. A proposal to eliminate Idaho’s Grocery Credit Refund and create a sales tax exemption for all grocery purchases would reduce state revenues by roughly $34 million… -
report January 30, 2015 Who Pays? (Fourth Edition)
Major tax overhauls are on the agenda in a record number of states, and “Who Pays?” documents in state-by-state detail the precise distribution of state income taxes, sales and excise… -
report January 10, 2015 Who Pays? Fifth Edition
Read the Report in PDF The 2015 Who Pays: A Distributional Analysis of the Tax Systems in All Fifty States (the fifth edition of the report) assesses the fairness of… -
report September 18, 2014 State Tax Codes As Poverty Fighting Tools
Read the Report in PDF Form The Census Bureau released data in September showing that the share of Americans living in poverty remains high. In 2013, the national poverty rate… -
report August 5, 2014 Sales Tax Holidays: An Ineffective Alternative to Real Sales Tax Reform
Sales taxes are an important revenue source, comprising close to half of all state revenues in 2013. But sales taxes are also inherently regressive because the lower a family’s income, the more of its income the family must spend on things subject to the tax.
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brief July 30, 2014 Options for Progressive Sales Tax Relief
See the 2016 Updated Brief Here Read the Policy Brief in PDF Form Sales taxes are one of the most important revenue sources for state and local governments—and are also… -
report July 21, 2014 State Estate and Inheritance Taxes
For much of the last century, estate and inheritance taxes have played an important role in helping states to adequately fund public services in a way that improves the progressivity of state tax systems. While many of the taxes levied by state and local governments fall most heavily on low-income families, only the very wealthy pay estate and inheritance taxes.
Recent changes in the federal estate tax, however, culminating in the “fiscal cliff ” deal of early 2013, have forced states to reevaluate the structure of their estate and inheritance taxes. Unfortunately, the trend of late has tended toward weakening or completely eliminating state estate taxes. This policy brief discusses inheritance and estate taxes and how states can adopt these important components of a progressive tax structure.
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report May 28, 2014 Pay-Per-Mile Tax is Only a Partial Fix
The gasoline tax is the single largest source of funding for transportation infrastructure in the United States, but the tax is on an unsustainable course. Sluggish gas tax revenue growth has put strain on transportation budgets at the federal and state levels, and has led to countless debates around the country about how best to pay for America’s infrastructure.
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report May 21, 2014 STAMP is an Unsound Tool for Gauging the Economic Impact of Taxes
The Beacon Hill Institute (BHI), a free-market think tank located at Suffolk University, frequently uses its State Tax Analysis Modeling Program (STAMP) to perform analyses purporting to show that lowering taxes, or not raising them, will benefit state economies. But STAMP suffers from a number of serious methodological problems and should not be relied upon by anybody seeking to understand the economic impacts of state tax policies.
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brief May 20, 2014 State Gasoline Taxes: Built to Fail, But Fixable
An updated version of this brief was published on February 9, 2017. Read this report in pdf. Every state levies taxes on gasoline and diesel fuel, usually just called… -
brief May 20, 2014 The Federal Gas Tax: Long Overdue for Reform
The federal gas tax is a critical source of funding for the nation’s transportation system, but its design is fundamentally flawed. In recent years, the consequences of those flaws have become increasingly obvious, as the federal government has struggled to fund a 21st century transportation network with a gas tax that has predictably failed to keep pace with the nation’s growing infrastructure needs. This ITEP Policy Brief explains how the federal gas tax works, its importance as a transportation revenue source, the problems confronting the gas tax, and the reforms that are needed to overcome these problems.
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report May 15, 2014 Improving Tax Fairness with a State Earned Income Tax Credit
The simplest, most effective, and most targeted way to begin to counteract regressive state tax codes is a refundable state Earned Income Tax Credit (EITC). Twenty-five states and the District of Columbia already have some version of a state EITC. Each one is modeled on the federal credit, making it easy for taxpayers to claim and simple for state tax officials to administer. This report explains how all states – even those who already have some form of the credit – can use the state EITC as a tool for improving the fairness of their state tax code.
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report May 8, 2014 Gas Tax Hits Rock Bottom in Ten States
In most states, the gasoline tax is set at a fixed number of cents per gallon of gas. South Carolina drivers, for example, have been paying 16 cents per gallon in state tax for more than a quarter century.1 But while this type of fixed-rate gas tax may appear to be flat over time, its lack of change in the face of inflation means that its “real” value, or purchasing power, is steadily declining. In ten states, this decline has brought the state’s inflation-adjusted gas tax rate to its lowest level in the state’s history.
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report April 1, 2014 Most Americans Live in States with Variable-Rate Gas Taxes
The federal government and many states are seeing shortfalls in their transportation budgets in part because the gasoline taxes they use to generate those funds are poorly designed. Thirty-two states and the federal government levy “fixed-rate” gas taxes where the tax rate does not change even as the cost of infrastructure materials inevitably increases over time. The federal government’s 18.4 cent gas tax, for example, has not increased in over twenty years. And almost half the states (24) have gone a decade or more without a gas tax increase.
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report March 24, 2014 Tennessee Hall Tax Repeal Would Overwhelmingly Benefit the Wealthy, Raise Tennesseans’ Federal Tax Bills by $60 Million
A new analysis performed using the ITEP Microsimulation Tax Model shows that the vast majority of Tennesseans would see very little benefit from Hall Tax repeal. Nearly two-thirds (63 percent) of the tax cuts would flow to the wealthiest 5 percent of Tennessee taxpayers, while another quarter (23 percent) would actually end up in the federal government’s coffers. Moreover, if localities respond to Hall Tax repeal by raising property taxes, some Tennesseans could actually face higher tax bills under this proposal.
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report March 19, 2014 90 Reasons We Need State Corporate Tax Reform
As states struggle with tough budget decisions about funding essential public services, profitable Fortunate 500 companies are paying little or nothing in state income taxes thanks to copious loopholes, lavish giveaways and crafty accounting, a new study by Citizens for Tax Justice and the Institute for Taxation and Economic Policy reveals.
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report February 25, 2014 The Sorry State of Corporate Taxes
Many of America’s Most Profitable Corporations Pay Little or No Federal Income Taxes; Multinationals Pay Higher Rates Abroad Than in the U.S.