Indiana Governor Mike Pence and the state’s legislative leaders recently announced a budget agreement that, among other things, phases the state’s flat personal income tax rate down from 3.4 percent to 3.23 percent by 2017.
Publications
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report April 26, 2013 5% Cut in Indiana’s Income Tax is Stacked in Favor of the Wealthy
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report April 8, 2013 Indiana Senate’s Income Tax Cut: Just as Lopsided as the Governor’s
The Indiana Senate Appropriations Committee recently approved a budget cutting the state’s personal income tax rate from 3.4 percent to 3.3 percent beginning in 2015. Although this proposal costs less than one-third the amount of Governor Pence’s preferred cut (which would take the rate down to 3.06 percent), it would still reduce state revenues by roughly $150 million each year.
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report April 2, 2013 Kansas House and Senate Proposals Set the Stage for Tax Hikes on Poor and Middle-Income Families
Earlier this year, Kansas Governor Sam Brownback proposed another round of personal income tax cuts (on top of those he signed into law last year).1 The House and Senate each responded with their own tax cut plans and are expected to reconcile their differences this week. To date, much attention has been given to the major difference between the House and Senate plans — the Senate bill includes permanently preserving a sales tax rate hike that was set to expire this summer while the House plan would allow the rate hike to expire. However, the long term impact of either plan should be of paramount concern to all Kansans because both plans eventually lead to the elimination of the state’s personal income tax.
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report April 1, 2013 Governor Jindal’s Tax Plan Would Increase Taxes on Poorest 60 Percent of Louisianans
In recent weeks, Louisiana Governor Bobby Jindal has released many details of the tax plan he first sketched out in January. The Governor proposes a revenue-neutral “tax swap” that would repeal all state income taxes and increase the state’s sales tax among other changes. A new ITEP analysis of the Governor’s plan shows that, if fully implemented in 2013, the plan would increase taxes on the poorest sixty percent of Louisianans overall, while providing large tax cuts for the best-off Louisiana taxpayers.
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report February 28, 2013 States with “High Rate” Income Taxes are Still Outperforming No-Tax States
Lawmakers in about a dozen states are giving serious consideration to either cutting or eliminating their state personal income taxes. In each case, these proposals are being touted as a way to boost economic growth.
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report February 27, 2013 Laffer’s New Job Growth Factoid is All Rhetoric and No Substance
A new talking point printed on the opinion page of The Wall Street Journal is proving irresistible to state lawmakers looking for an excuse to reduce or eliminate their states’ income taxes:
A new analysis by economist Art Laffer for the American Legislative Exchange Council finds that, from 2002 to 2012, 62% of the three million net new jobs in America were created in the nine states without an income tax, though these states account for only about 20% of the national population.
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report February 13, 2013 IDACorp– Biggest Winner Under Property Tax Plan– Pays Nothing in State Income Taxes
Idaho Governor Butch Otter and the state legislature are seriously considering repealing the personal property tax on business equipment. The governor claims that repealing the tax would help the state’s economy, but says that he is “painfully aware” that repeal would dramatically cut into the revenues that many local governments depend on to provide public services. 1 The tax generates $141 million in revenue every year for cities, counties, and public schools. As a result, the Governor says that he “can’t predict” whether lawmakers will be able to reach agreement on repealing the tax.
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report February 1, 2013 Kansas Governor’s New Plan Increases Taxes on Poor Yet Slashes Revenue by $340 Million
Kansas Governor Sam Brownback proposed, for the second straight year, major tax changes during his State of the State speech. These new changes include lowering the tax rates to 1.9 and 3.5 percent, eliminating itemized deductions for mortgage interest and property taxes paid, and raising the sales tax.
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report January 23, 2013 More Inaccuracies, Bigger Omissions: Arthur Laffer’s Newest Study of Income Tax Repeal Falls Short
Arthur Laffer’s consulting firm–Arduin, Laffer & Moore Econometrics (ALME)–has released a report purporting to show that North Carolina could usher in an economic boom if it repeals its personal and corporate income taxes and replaces them primarily with a much larger sales tax. Prepared for the Civitas Institute, “More Jobs, Bigger Paychecks” relies on an economic analysis that is fundamentally flawed to the point of making it entirely useless.
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report January 11, 2013 Proposal to Eliminate Income Taxes Amounts to a Tax Increase on Bottom 80 Percent of Louisianans
Louisiana Governor Bobby Jindal has said that he supports the elimination of the state’s personal and corporate income taxes. In fiscal year 2012, Louisiana collected nearly $3 billion in revenues from its personal and corporate income taxes.
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report December 13, 2012 Previewing Tax Reform in the States: National Trends and State-specific Prospects for 2013
Following an election that left half the states with veto-proof legislative majorities, 39 states with one-party rule and more than a dozen with governors who put tax reform high on their agendas, 2013 promises to be a big year for changes to state tax laws.
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brief December 1, 2012 Tax Principles: Building Blocks of A Sound Tax System
The fundamental purpose of taxation is to raise the revenue necessary to fund public services. While there are many ways to achieve this goal, a widely agreed-upon set of principles should be used to evaluate tax systems. This policy brief provides a basic overview of five commonly cited principles of sound tax policy: equity, adequacy, simplicity, exportability, and neutrality.
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report October 1, 2012 Five Steps Toward a Better Tax Expenditure Debate
Almost without exception, state lawmakers do not closely scrutinize special tax credits, exemptions, and other “tax expenditures” on a regular basis. A recent report by the Pew Center on the States found, for example, that half the states have done nothing even remotely rigorous in the last five years to determine if even a single one of their economic development tax incentives is working.
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report September 13, 2012 State Tax Codes As Poverty Fighting Tools
The tax systems of virtually every state are pushing poor families deeper into poverty. But state tax systems also have the potential to play a role in fighting poverty. The four low-income tax credits discussed in this report are among the most cost-effective anti-poverty strategies available to lawmakers: the Earned Income Tax Credit, property tax circuit breakers, targeted low-income tax credits, and child-related tax credits. This report identifies the states in which each of these credits is offered, and provides specific recommendations tailored to policymakers in each state as they work to combat poverty.
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report August 27, 2012 Most of Indiana Tax Rate Cut Would Flow to Upper-Income Taxpayers
Alternative Could Provide Larger Tax Cuts for Most Hoosiers Indiana gubernatorial candidate, and current U.S. Representative, Mike Pence recently unveiled his plan to cut the state’s flat personal income tax… -
brief August 1, 2012 Corporate Income Tax Apportionment and the “Single Sales Factor”
One of the thorniest problems in administering state corporate income taxes is how to distribute the profits of multi-state corporations among the states in which they operate. Ultimately, each corporation’s profits should be taxed in their entirety, but some corporations pay no tax at all on a portion of their profits. This problem has emerged, in part, due to recent state efforts to manipulate the “apportionment rules” that distribute such profits. This policy brief explains how apportionment rules work and assesses the effectiveness of special apportionment rules such as “single sales factor” as economic development tools.
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brief August 1, 2012 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 exempts middle- and low income taxpayers.
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report July 15, 2012 Four Tax Ideas for Jobs-Focused Governors
As the nation’s governors gather in Williamsburg, Virginia this week, their focus is on their Chairman’s initiative, Growing State Economies. Too often, however, a governor’s knee-jerk response to a lagging economy is to start cutting taxes, even though state tax cuts offer a demonstrably low economic bang-for-the-buck, for a number of reasons.
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brief July 1, 2012 The Progressive Income Tax: An Essential Element of Fair and Sustainable State Tax Systems
A few vocal critics have pointed to state personal income taxes as the source of a variety of fiscal and economic problems- arguing that it has enabled wasteful spending, fueled the volatility of revenue collections, or even stifled job-creation. Accordingly, some of these critics have called for the outright repeal of the income tax, while others have suggested making it significantly less progressive. Such proposals, if acted upon, would make it all but impossible for state tax systems to produce revenue in a fair and sustainable fashion.
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brief July 1, 2012 Sales Tax Holidays: A Boondoggle
Sales taxes are among the most important–and most unfair–taxes levied by state governments. Sales taxes accounted for a third of state taxes in 2011, but sales taxes are regressive, falling far more heavily on low- and middle- income taxpayers than on the wealthy. In recent years, lawmakers thinking they might lessen the impact of these taxes have enacted “sales tax holidays” that provide temporary sales tax breaks for purchases of clothing, computers, and other items. This policy brief looks at sales tax holidays as a tax reduction device.
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report May 24, 2012 Tax Bill Signed by Governor Brownback Makes Kansas an Outlier
Kansas Governor Sam Brownback recently signed into law Senate Substitute for HB 2117, a tax bill that dramatically changes the Kansas income tax structure. The legislation will cut taxes by… -
report May 17, 2012 Latest Kansas Tax Bill Carries $680 Million Price Tag and Raises Taxes on Those Least Able to Pay
A joint House-Senate conference committ ee is poised to approve a revised version of the tax bill recently sent to the Governor by the House of Representatives. An Institute on… -
report May 10, 2012 Three Strategies for Making Enacted Kansas Tax Plan Less Unfair and Less Costly
Yesterday, the Kansas House of Representatives passed, and sent to Governor Sam Brownback, a tax plan, Senate Substitute for House Bill 2117, that had been previously ratified by the state… -
report May 8, 2012 Kansas Tax Bill Would Cost $600 Million a Year While Hiking Taxes on Low-Income Families
Kansas legislators are set to vote on a tax bill recently approved by a joint House-Senate conference committee. An ITEP analysis of the agreed-upon tax bill shows that it would… -
report April 25, 2012 How Federal Tax Reform Can Help or Hurt State and Local Governments
Federal tax reform can affect state and local taxes in several ways. The federal government can create, repeal or change tax expenditures in a way that is passed on to…