Illinois

A tiny fraction of the U.S. population (one-half of one percent) earns more than $1 million annually. But in 2018 this elite group would receive 48.8 percent of the tax cuts proposed by the Trump administration. A much larger group, 44.6 percent of Americans, earn less than $45,000, but would receive just 4.4 percent of the tax cuts.

A tiny fraction of the Illinois population (0.8 percent) earns more than $1 million annually. But this elite group would receive 54.9 percent of the tax cuts that go to Illinois residents under the tax proposals from the Trump administration. A much larger group, 41.0 percent of the state, earns less than $45,000, but would receive just 3.9 percent of the tax cuts.

While only a few states still remain mired in overtime budget debates, there is plenty of budget and tax news from around the country this week. Efforts are underway to repeal gas tax increases in California and challenge a local income tax in Seattle, Washington. And New Jersey legislators' law to modernize its tax code to tax Airbnb rentals has been vetoed for now.

2017 marked a sea change in state tax policy and a stark departure from the current federal tax debate as dubious supply-side economic theories began to lose their grip on statehouses. Compared to the predominant trend in recent years of emphasizing top-heavy income tax cuts and shifting to more regressive consumption taxes in the hopes […]

The Earned Income Tax Credit (EITC) is a policy designed to bolster the earnings of low-wage workers and offset some of the taxes they pay, providing the opportunity for struggling families to step up and out of poverty toward meaningful economic security. The federal EITC has kept millions of Americans out of poverty since its enactment in the mid-1970s. Over the past several decades, the effectiveness of the EITC has been magnified as many states have enacted and later expanded their own credits.

The broadly outlined tax proposals released by the Trump administration would not benefit all taxpayers equally and they would not benefit all states equally either. Several states would receive a share of the total resulting tax cuts that is less than their share of the U.S. population. Of the dozen states receiving the least by this measure, seven are in the South. The others are New Mexico, Oregon, Maine, Idaho and Hawaii.

Earlier this year, the Trump administration released some broadly outlined proposals to overhaul the federal tax code. Households in Illinois would not benefit equally from these proposals. The richest one percent of the state’s taxpayers are projected to make an average income of $2,726,200 in 2018. They would receive 56.1 percent of the tax cuts that go to Illinois’s residents and would enjoy an average cut of $134,270 in 2018 alone.

Sales taxes are an important revenue source, composing close to half of all state tax revenues. But sales taxes are also inherently regressive because the lower a family’s income, the more the family must spend on goods and services subject to the tax. Lawmakers in many states have enacted “sales tax holidays” (at least 16 states will hold them in 2017), to provide a temporary break on paying the tax on purchases of clothing, school supplies, and other items. While these holidays may seem to lessen the regressive impacts of the sales tax, their benefits are minimal. This policy brief…

Illinois and New Jersey made national news earlier this month after resolving their contentious budget stalemates. But they weren’t the only states working through (and in some cases after) the holiday weekend to resolve budget issues.

This week, several states attempt to wrap up their budget debates before new fiscal years (and holiday vacations) begin in July. Lawmakers reached at least short-term agreement on budgets in Alaska, New Hampshire, Rhode Island, and Vermont, but such resolution remains elusive in Connecticut, Delaware, Illinois, Maine, Pennsylvania, Washington, and Wisconsin.

This week, special legislative sessions featuring tax and budget debates are underway or in the works in Kentucky, Minnesota, New Mexico, and West Virginia, as lawmakers are also running up against regular session deadlines in Illinois, Kansas, and Oklahoma. Meanwhile, a legislative study in Wyoming and an independent analysis in New Jersey are both calling for tax increases to overcome budget shortfalls.

The trend is clear: states are experiencing a rapid decline in state corporate income tax revenue. Despite rebounding and even booming bottom lines for many corporations, this downward trend has become increasingly apparent in recent years. Since our last analysis of these data, in 2014, the state effective corporate tax rate paid by profitable Fortune 500 corporations has declined, dropping from 3.1 percent to 2.9 percent of their U.S. profits. A number of factors are driving this decline, including: a race to the bottom by states providing significant “incentives” for specific companies to relocate or stay put; blatant manipulation of…

States are experiencing a rapid decline in state corporate income tax revenue, and the downward trend has become increasingly pronounced in recent years. Despite rebounding bottom lines for many corporations, a new ITEP report, 3 Percent and Dropping: State Corporate Tax Avoidance in the Fortune 500, 2008 to 2015,finds that effective tax rates paid by […]

Public debates over federal immigration reform, specifically around undocumented immigrants, often suffer from insufficient and inaccurate information about the tax contributions of undocumented immigrants, particularly at the state level. The truth is that undocumented immigrants living in the United States paybillions of dollars each year in state and local taxes. Further, these tax contributions would increase significantly if all undocumented immigrants currently living in the United States were granted a pathway to citizenship as part of comprehensive immigration reform. Or put in the reverse, if undocumented immigrants are deported in high numbers, state and local revenues could take a substantial…

In the Tax Justice Digest we recap the latest reports, blog posts, and analyses from Citizens for Tax Justice and the Institute on Taxation and Economic Policy. Here’s a rundown of what we’ve been working on lately.  Regressive and Loophole-Ridden: Issues with the House GOP Border Adjustment Tax Proposal In recent weeks, the Republican congressional […]

Over the past several decades, state corporate income taxes have declined markedly. One of the factors contributing to this decline has been aggressive tax avoidance on the part of large, multi-state corporations, costing states billions of dollars. The most effective approach to combating corporate tax avoidance is combined reporting, a method of taxation currently employed in more than half of the states that tax corporate income. The two most recent states to enact combined reporting are Rhode Island in 2014 and Connecticut in 2015. In several states, including Connecticut, Illinois, Massachusetts, Rhode Island, and Vermont, lawmakers adopted the policy after…

This week saw a nearly successful attempt to right the fiscal ship in Kansas; regressive tax proposals introduced in WestVirginia, Georgia, and Missouri; ongoing gas tax fights in Indiana, South Carolina, and Tennessee; and further tax and budget wrangling in Illinois, New Mexico, Oklahoma, and beyond. — Meg Wiehe, ITEP State Policy Director, @megwiehe Both […]

This is the fourth installment of our six-part series on 2017 state tax trends. The introduction to this series is available here.   State lawmakers often find themselves looking for ways to raise revenue to fund vital public services, fill budget gaps, or pay for the elimination or weakening of progressive taxes. Lately, that search has […]