The ITEP Guide to Fair State and Local Taxes




The ITEP Guide to Fair State and Local Taxes, released in March of 2011, offers citizens, activists, journalists, and policymakers a detailed primer on state and local tax policy. The guide explains the differences between progressive, flat, and regressive taxes — and why you should care. It covers the full range of taxes that states and localities can impose, including personal and corporate income taxes, property taxes, sales taxes, excise taxes, and estate taxes.

  • Complete Report (Right Click and Save As to Download)

    • Click here to read the full report in PDF form. This version is set up for easy navigation. Click on any chapter in the table of contents to immediately jump to that chapter, or click on any of the key terms used throughout the report to be taken to the glossary section defining that term. If you look up a key term in the glossary, you can also click on that term to return to the place in the document where you were reading. Click on chapter titles and subheadings to go back to the table of contents. Note that this version does not include the state data appendices, which must be downloaded separately.

  • Chapter 1: Tax Fairness Fundamentals

    • An overview of tax fairness, and why it matters. Includes definitions for basic fairness terms like progressive, regressive, and proportional taxation.

  • Chapter 2: Basic Principles and Terms

    • A discussion of five important tax policy principles: equity, adequacy, simplicity, exportability, and neutrality. Also explains basic tax policy terms like the tax base, tax rate, and federal offset.

  • Chapter 3: Sales and Excise Taxes

    • Explains how sales and excise taxes work, and the fairness implications of those taxes. Among the major tax policy issues and options discussed are taxes on internet sales, taxes on personal services, and the potential to offset sales tax regressivity through targeted tax credits.

  • Chapter 4: Property Taxes

    • Explains the mechanics of property taxes on owner-occupied residential property, rental property, business property, and personal property. The merits of various property tax relief mechanisms are examined including property tax caps, circuit breakers, homestead exemptions, deferral programs, split roll systems, and income tax breaks for property taxes paid.

  • Chapter 5: Personal Income Taxes

    • Describes the calculation of personal income tax liability by explaining such concepts as total income, adjusted gross income, exemptions and deductions, taxable income, tax rates, and tax credits. The importance of the federal offset is also discussed. Major opportunities for income tax reform are examined, including enhancing graduated rate structures, repealing capital gains tax breaks, indexing state income tax provisions, and offering targeted tax breaks to low- and middle-income families.

  • Chapter 6: Corporate Income Taxes

    • Discusses the importance, and the mechanics, of the state corporate income tax. Particular attention is paid to revenue stability concerns. Examines major corporate tax issues like combined reporting, apportionment rules, “nowhere income,” corporate minimum taxes, and disclosure and reporting.

  • Chapter 7: Other Revenue Sources

    • Discusses other state and local revenue sources, specifically user fees, estate and inheritance taxes, gambling revenues, and borrowing.

  • Chapter 8: Taxes and Economic Development

    • Examines the linkage between tax policy and state economic development. Explains the folly of low-tax strategies, offers guidance on how to assess claims regarding the economic impact of state tax policies, and discusses how to ensure accountability in economic development policies.

  • Chapter 9: Other Steps Toward (Or Away From) Fair Taxes

    • Discusses the vital role for tax expenditure reporting and tax incidence analysis in informing state tax debates. Explains the importance of rainy day funds, and identifies the problems associated with tax and expenditure limitations (TELs).

  • Glossary

    • Definitions of key terms used throughout The ITEP Guide to Fair State and Local Taxes.

Appendices

  • Chapter 3 Appendix [Excel File] (Updated 10/2012)

    • Contains state-by-state data on state and local sales tax policies. Displays information on state and local sales tax rates, tax bases, revenues, and progressive sales tax relief mechanisms, among other items.

  • Chapter 4 Appendix [Excel File] (Updated 10/2012)

    • Contains state-by-state information on statewide property tax policies. Includes descriptions of state circuit breakers and homestead exemptions, and data on property tax revenues.

  • Chapter 5 Appendix [Excel File] (Updated 10/2012)

    • Contains state-by-state information and data on state personal income taxes. Displays personal income tax rates and revenues, and provides information on numerous deductions, exemptions, and credits.

  • Chapter 6 Appendix [Excel File] (Updated 10/2012)

    • Contains state-by-state information and data on state corporate income taxes. Corporate tax rates and revenues are both displayed, as are state apportionment formulas and combined reporting requirements.

  • Chapters 7 and 9 Appendices [Excel File] (Updated 10/2012)

    • Contains state-by-state information on various tax policy issues that do not fit into the above categories. Displays information on whether or not each state levies an estate tax, the presence of any tax and expenditure limitations (TELs), and current tax expenditure reporting practices and tax incidence analysis capabilities.