Reports

Kansas Governor Sam Brownback unveiled his long anticipated tax plan last week. Sweeping changes to reduce the state’s reliance on its progressive personal income tax are at the core of the proposal. The plan cuts income tax rates, eliminates a variety of income tax deductions and credits, and makes permanent a temporary sales tax rate […]

State gas taxes are currently levied in every state, and are the most important source of transportation revenue under the control of state lawmakers. In recent years, however, state gas taxes have fallen dramatically relative to the rising cost of asphalt, concrete, labor, and everything else that goes into maintaining a transportation network. The results […]

In October, South Carolina Governor Nikki Haley suggested that gradually repealing the state’s corporate income tax should be a priority for lawmakers in 2012. Haley’s idea was alarming, but hardly surprising: in the past year, governors in Arizona and Florida have proposed similar plans, and lawmakers in a number of other states have moved to […]

Earlier this year, Berkshire Hathaway Chairman Warren Buffett made headlines by publicly decrying the stark inequity between his own effective federal tax rate (about 17 percent, by his estimate) and that of his secretary (about 30 percent). The resulting media firestorm has drawn welcome attention to unfair tax breaks that allow the richest Americans to […]

Given the challenging fiscal climate facing Kansas, the proposed income tax plan should be thought of not simply as a tax cut but as a tax swap. News reports confirm our expectation that revenues from income taxes would be at least partially replaced by sales and property taxes under the Governor’s plan. The graphic below […]

This report presents a comprehensive view of anti-poverty tax policy decisions made in the states in 2011 and offers recommendations every state should consider to help families rise out of poverty. States can jump-start their anti-poverty efforts by enacting one or more of four proven and effective tax reforms: refundable state Earned Income Tax Credits, […]

Data from the Census Bureau shows that overall, Texas could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Texas as a low tax state — instead, they pay more than their fair share of state and local taxes. Read the Full Report (PDF)

Data from the Census Bureau shows that overall, Washington could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Washington as a low tax state — instead, they pay more than their fair share of state and local taxes. Read the Full Report (PDF)

Data from the Census Bureau shows that overall, Tennessee could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Tennessee as a low tax state — instead, they pay more than their fair share of state and local taxes. Read the Full Report (PDF)

Data from the Census Bureau shows that overall, Florida could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Florida as a low tax state — instead, they pay more than their fair share of state and local taxes. Read the Full Report (PDF)

Data from the Census Bureau shows that overall, Arizona could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Arizona as a low tax state — instead, they pay more than their fair share of state and local taxes. Read the Full Report (PDF)

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.

With the state’s gas tax pegged to the price of gasoline, North Carolina is scheduled to raise its gas tax rate on July 1. This increase was entirely predictable, but is understandably controversial. Unfortunately, the debate surrounding what to do in the wake of this increase has been far too narrow, focusing on just two […]

How much is enough? On top of the close to $500 million in corporate tax breaks Illinois doles out each year, Governor Pat Quinn now finds himself confronted by a growing crowd of CEO’s demanding even more. In the wake of tax-break lobbying efforts by Motorola, Sears and Caterpillar, the latest corporation seeking preferential tax […]

My testimony today examines the erosion of Rhode Island’s corporate income tax, and the multistate tax avoidance schemes that have contributed to this erosion. In addition, it discusses the single best strategy available to lawmakers seeking to respond to the problem of corporate tax avoidance—mandatory combined reporting. Requiring combined reporting of the income of multistate […]

My testimony today focuses on House Bill 5737, which would enact a variety of reforms designed to enhance the level of scrutiny applied to new tax credits, deductions, exemptions, and exclusions. This testimony emphasizes how these reforms would help remove counterproductive biases in favor of relying too heavily on tax preferences; how similar reforms have […]

Five months into 2011, a glimmer of hope for progressive tax policy and a balanced, sensible approach to state budget woes has emerged in Connecticut. Lawmakers in all but a handful of states are continuing to grapple with historic budget shortfalls as they craft and finalize their budget plans for next year. State revenues continue […]

In just the last few weeks, Arkansas and Illinois joined New York, North Carolina, and Rhode Island in enacting legislation requiring some online retailers, like Amazon.com, to collect sales taxes on purchases made by their state’s residents. Vermont’s House of Representatives recently passed similar legislation, and Arizona, California, Connecticut, Hawaii, Massachusetts, Minnesota, Mississippi, Missouri, New […]

My testimony focuses on Governor Chafee’s Sales Tax Modernization Proposal, which would generally broaden Rhode Island’s sales tax base, lower the general state sales tax rate, and raise additional revenue to help mitigate budget cuts. In particular, my testimony will provide thoughts on two components of the governor’s proposal: adding a mix of services to […]

In 2011, thirty one states and the District of Columbia allow a group of income tax breaks known as “itemized deductions” (Figure 1). Itemized deductions are designed to help defray a wide variety of personal expenditures that affect a taxpayer’s ability to pay taxes, including charitable contributions, extraordinary medical expenses, mortgage interest payments and state […]

The precipitous drop in state tax collections during the recent recession has prompted some observers to argue that relying on volatile state taxes is a recipe for budgetary disaster. The most recent version of this argument, made by the Wall Street Journal’s Robert Frank, suggests that the personal income tax in particular is highly volatile, […]

Earlier this month, Illinois Senate President John Cullerton suggested that limiting the state’s generous income tax break for retirement income “would just be a matter of fairness.” Senator Cullerton’s suggestion gives Illinois policymakers a welcome opportunity to reflect on the appropriate design of senior-citizen income tax relief in Illinois. This paper summarizes the mechanisms used […]

My testimony focuses on House Bill 581, which would create a Missouri Earned Income Tax Credit (EITC). In particular, my testimony will discuss the impact of this bill on the overall fairness of Missouri’s tax system. Read the Full Report (PDF)

The budget outlook for state governments is bleak. Despite evidence that revenues are rebounding, there is a general acknowledgement that ?broad fiscal conditions remain fragile. The need for public investments—particularly health care for low-wage or unemployed workers and their families—is greater than ever. An increasing number of states are struggling to keep their fiscal year […]

In 2008, Maryland enacted a temporary change to its income tax in order to compensate for revenue lost from repealing a law subjecting computer services to the state’s sales tax. The income tax change in question, which expired at the end of 2010, created a new top income tax bracket with a rate of 6.25 […]