State Policy
State taxes pay for essential public services, from education to health care. But the ideal design of a tax system is complicated. ITEP’s state policy resources offer insights into central issues, including the impact of state tax systems on individuals, families, and businesses. Its work also analyzes the sustainability of revenue sources over time.
ITEP's State Policy Research Priorities
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blog June 11, 2020 State Rundown 6/11: Fiscal Debates Continue Amid Turmoil
As calls to defund the police demonstrate, state and local decisions about funding priorities and how those funds are raised are deeply embedded in racial justice issues. Tax justice is… -
blog May 27, 2020 State Rundown 5/27: Some States Finally Talking Revenue Solutions to Revenue Crisis
This week the immense scale and uneven distribution of economic and health damage from the COVID-19 pandemic continued to come into focus, hand in hand with greater clarity around pandemic-related revenue losses threatening state and local revenues and the priorities—such as health care, education, and public safety—they fund. Officials in many states, including Ohio and Tennessee, nonetheless rushed to declare their unwillingness to be part of any solution that includes raising the tax contributions of their highest-income residents. On the brighter side, some leaders are willing to do just that, for example through progressive tax increases proposed in New York and corporate tax subsidy reductions discussed in California.
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blog May 20, 2020 State Rundown 5/20: State Revenue Crisis Getting Clearer…and Scarier
State policymakers are navigating incredibly uncertain waters these days as they attempt to get a firmer grasp on the scale of their revenue crises, identify painful budget cuts they may have to make in response, and look for ways to raise tax revenues coming from the households and corporations still bringing in large incomes and profits amid the pandemic—all while hoping that additional federal aid and greater flexibility in how they can use federal CARES Act funds will help relieve some of these difficult decisions.
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ITEP Work in Action May 14, 2020 Fiscal Policy Institute: Unemployment Insurance Taxes Paid for Undocumented Workers in NYS
In the midst of a pandemic, there has been a growing call for undocumented immigrants, who make up five percent of the New York State labor force, to be covered… -
blog May 7, 2020 State Rundown 5/7: State Fiscal Responses to Pandemic Starting to Get Real
State lawmakers are starting to use fiscal policy levers to address the COVID-19 pandemic, but the actions vary greatly and are just a start. Mississippi, for example, is one state still clarifying who has authority to determine how federal aid dollars are spent. Colorado, Georgia, Missouri, and Ohio are among the many states identifying painful funding cuts they will likely make to shared priorities like health care. The Louisiana House and the Minnesota Senate each advanced tax cuts and credits that could dig their budget holes even deeper. Connecticut leaders are looking at one of the more comprehensive packages, which includes funding cuts as well as revenue measures to reduce the severity of those cuts by cancelling the scheduled expiration of prior-year business tax increases.
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blog April 29, 2020 State Rundown 4/29: State Responses and Federal Aid Could Be Among “May Flowers” to Come
April has brought relentless showers of troublesome tax and budget news as the COVID-19 pandemic wreaked havoc on communities and the public services and institutions that both support and depend on them. There is hope, however, that these troubles have opened the eyes of policymakers and that May will bring more clarity and strong action in the form of federal fiscal relief as well as home-grown state and local responses.
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blog April 29, 2020 Economic Catastrophe in States Looms as Federal Relief Lags
A bipartisan group of governors and senators from Louisiana to Maryland to Ohio have called for at least $500 billion in state and local fiscal relief. They also need specific help with testing, protective equipment, unemployment costs, Medicaid costs, social services, education and infrastructure. States can’t be on their own as they address the double whammy of plunging revenue and skyrocketing needs.
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blog April 29, 2020 Sales Tax Policy in a Pandemic: Exemptions for Digital Goods and Services Are More Outdated Than Ever
Many states are making the decline in sales tax collection worse by failing to apply their sales taxes to digital goods (such as downloads of music, movies, or software) and services (such as digital streaming). A state that taxes movie theater tickets but not digital streaming, for instance, is needlessly hastening the decline of its own sales tax.
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blog April 22, 2020 State Rundown 4/22: Earth Day Lessons from Pangea to Pandemic
In different ways, Earth Day and the COVID-19 pandemic convey a similar lesson: people around the world face shared struggles and disparate impacts, which they must work together to overcome through both emergency action and systemic change. In keeping with that lesson, state fiscal policy news this week was strikingly similar around the country, as states take account of the major threat posed by the pandemic to their budgets and attempt to grapple with its disproportionate impacts on communities of color and low-income families.
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blog April 20, 2020 It’s Time to Rethink Those Tax Cuts
The full effect of the coronavirus pandemic on state revenue streams remains largely unknown. One key policy option is to reevaluate recent misguided tax cuts—particularly those that have not yet taken full effect and will add to growing revenue shortfalls in the coming years.
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blog April 15, 2020 State Rundown 4/15: Tax Day Delayed but Other Important Work Accelerated
April 15 is traditionally the day federal and state income taxes are due, but like so much else, Tax Day is on hold for the time being. Meanwhile the pandemic’s disastrous and uneven effects on communities and shared institutions are decidedly not suspended. But nor are the efforts of individuals, advocates, and policymakers to develop solutions to respond to the immediate crisis while also building better systems going forward. ITEP’s recommendations for state tax policy responses are now available here, and this week’s Rundown includes experiences and perspectives on paths forward from around the country.
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report April 15, 2020 State Options to Shore up Revenues and Improve Tax Codes amid Pandemic
The COVID-19 pandemic is an extraordinarily challenging time, as we see harm and struggle affecting the vast majority of our families, businesses, public services, and economic sectors. No one will be unaffected by the crisis, and everyone has a stake in the recovery and faces tough decisions. In the world of state fiscal policy, where revenue shortfalls are likely to be far bigger than can be filled by the initial $150 billion in federal aid or absorbed through funding cuts without causing major harm, tax increases must be among those decisions. Even with more federal support, states will need home-grown revenue solutions in the short, medium, and long terms as the crisis and its fiscal fallout intensify, subside, and eventually give way to a new normal. States must balance their budgets, and research shows that they harm their economies when they choose deep funding cuts to vital public investments over increasing tax contributions from those who can afford them.
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blog April 9, 2020 State Rundown 4/9: Pandemic’s Fiscal Effects Slowly Coming into Focus
The COVID-19 pandemic continued this week to wreak havoc on lives and communities around the world. The fiscal fallout of the virus in the states is growing as well, and beginning this week to come into sharper focus. This week’s Rundown brings together what we know of that slowly clarifying picture and how states are responding so far.
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blog April 3, 2020 State Rundown 4/3: States Welcome Federal Aid, Seek Further Solutions
States and families got good news this week as Congress came together to pass major aid to help during the COVID-19 coronavirus pandemic. But that bright spot came amid an onslaught of very difficult news about the public health crisis and the economic and fiscal fallout accompanying it. This week’s Rundown brings you the latest on these developments and state and local responses to them.
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blog April 2, 2020 Federal Relief Bill Doesn’t Go Far Enough: Q&A with Meg Wiehe
The final version of the Coronavirus Aid, Relief and Economic Security (CARES) Act enacted last week included rebate provisions that will reach most low-, moderate- and middle-income adults and children, but not everyone. Meg Wiehe sits down for a Q&A to discuss who benefits from the rebate provision, who is excluded and how states can respond to support communities.
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blog April 2, 2020 Sales Taxes and Social Distancing: State and Local Governments May Face Their Steepest Sales Tax Decline Ever
One pressing question is what will an economic downturn in which consumers are anxious, facing job loss, or simply spending their time sheltering in place and not spending money in typical ways, mean for states’ ability to raise revenue?
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blog April 1, 2020 Adding Flexibility to Make the EITC Work During the Pandemic
Temporarily modifying the structure of the EITC to reflect the realities of our current economy could provide a vital lifeline to low-income workers who have seen their incomes disappear during this crisis. What follows are a few such ideas which could be implemented at either the federal or state levels, or both.
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blog March 26, 2020 State Rundown 3/26: Pandemic’s Health and Fiscal Fallout Continues to Grow
This week’s Rundown brings you the most useful reading and resources about how states are affected by and responding to the COVID-19 pandemic. These include: landing pages for the most up-to-date lists of state policy responses; ITEP’s own materials on state policy options and the federal response bills; insights on how a race-forward approach can improve these efforts at all levels; updates on state fiscal troubles and legislative postponements; and the developing picture of which states and communities could be affected more than others.
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blog March 19, 2020 State Rundown 3/19: Spring Is Here but States Brace for Long Winter
As the COVID-19 pandemic continues to disrupt more and more aspects of life and cause greater and greater harms to public health and the economy, information is changing by the hour. State policymakers, if they are even able to convene, are wholly focused on how to respond to the crisis. The pandemic is certain to pose a series of fiscal challenges for states and their economies, and this week’s Rundown focuses on the most helpful resources and the latest state-by-state updates available.
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blog March 18, 2020 It’s Time for Some State Fiscal Policy Triage
The COVID-19 novel coronavirus’s effects on public health and economies at all scales are creating a daunting situation for state budgets as well. Lawmakers can choose and prioritize their responses through a straightforward approach similar to that taken by health professionals: marshal and reinforce available resources, triage response options to prioritize the most vital services and most vulnerable people, and enact or strengthen the policies that will help address longer-term issues as well as immediate emergencies.
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blog March 11, 2020 State Rundown 3/11: Georgia Bucks Trend of Cautious Policymaking Amid Crises
With all eyes on the potential effects of the oil price war and COVID-19 coronavirus on lives, communities, and economies, Georgia House lawmakers this week crammed through a regressive and costly tax cut for the rich with essentially no debate, information, or transparency. Most states are proceeding much more responsibly, assessing the ramifications for their service provision needs and revenues to fund those needs.
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blog March 6, 2020 Talking Taxes in Alaska
Alaska’s tax system underwent major changes in the 1970s when oil was found at Prudhoe Bay. Lawmakers repealed the state’s personal income tax (making Alaska the only state ever to do so) and began balancing the state’s budget primarily with oil tax and royalty revenue instead. But as oil prices and production levels have declined, a yawning gap has opened between state revenues and the cost of providing vital public services.
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blog March 4, 2020 State Rundown 3/4: Sun Shining on Progressive Tax Efforts This Week
Wisconsin’s expansion of a capital gains tax break for high-income households represents a dark spot on this week’s state fiscal news, and the growing threat of COVID-19 is casting an ominous shadow over all of it, but otherwise the picture is pleasantly sunny, featuring small steps forward for sound, progressive tax policy. An initiative to create a graduated income tax in Illinois, for example, got a vote of confidence from a major ratings agency, while a similar effort went public in Michigan and two progressive income tax improvements were debated in Rhode Island. Gas tax updates made encouraging progress in Alaska and Kentucky. And Hawaii leaders continued to work toward important Earned Income Tax Credit (EITC) and minimum wage improvements.
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blog February 27, 2020 State Rundown 2/27: Leaps Forward Needed for Tax Justice
This weekend’s Leap Day should be a welcome extra day for state lawmakers, advocates, and observers who care about tax and budget policy, as there is an overflow of proposals and information to digest. Most importantly, as emphasized in our “What We’re Reading” section, there are never enough days in a month to do justice to the importance of Black History Month and Black Futures Month. In state-specific debates, Oregon and Washington leaders are hoping to take a leap forward in raising funds for homelessness and housing affordability measures. Lawmakers in West Virginia and Wisconsin could use a day to return to the drawing board on recently rejected tax cut proposals. New Jersey and Rhode Island leaders have proposed forward-thinking progressive income tax measures. And lawmakers continue to work overtime on needed gas tax updates in Arizona, Massachusetts, and Utah.
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brief February 26, 2020 How Long Has It Been Since Your State Raised Its Gas Tax?
Many state governments are struggling to repair and expand their transportation infrastructure because they are attempting to cover the rising cost of asphalt, machinery, and other construction materials with fixed-rate gasoline taxes that are rarely increased.