Kansas

As autumn brings a colorful display of foliage to many states, so too are tax proposals taking on interesting hues as states move from the summer off-season toward 2020 legislative sessions. Ohio lawmakers are blue in the face from debating and re-debating tax and budget issues there. Maryland residents again showed they can’t be called yellow-bellied when it comes to footing the bill for needed education improvements, showing their broad support for higher taxes to fund those needs even despite a hefty price tag. Alaska, Michigan, and other states are giving the green light to laws implementing their new ability…

Creative thinking from Pennsylvania lawmakers has helped them discover that the Wayfair ruling allowing states to collect sales tax from online retailers can also help them identify and tax corporate profits earned in their borders. Similarly, New York leaders had the vision to put bold environmental goals in place and identify a carbon price as a potential pay-for. Gubernatorial candidates in Mississippi and Kentucky showed less ingenuity, proposing tax cuts even though Mississippi is still phasing in a massive tax cut from a few years ago and Kentucky’s next election isn’t until 2020. Meanwhile, the old idea of eliminating income…

This report presents a comprehensive overview of anti-poverty tax policies, surveys tax policy decisions made in the states in 2019 and offers recommendations that 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 strategies to reduce the share of taxes paid by low- and moderate-income families: state Earned Income Tax Credits, property tax circuit breakers, targeted low-income credits, and child-related tax credits.

Residents of several states are spending their palindrome week reading ballot initiatives forwards and backwards to decide whether or not to support them, including measures to improve education funding in California and Idaho, allow Alaska and Colorado to invest more in public services, and constitutionally prohibit income taxation in Texas. New Jersey lawmakers are giving the same thorough treatment to the state’s corporate tax subsidies. And advocates in Chicago, Illinois, have a bold proposal to flip the script on upside-down taxes there. But devotees of good policy and honest government in North Carolina won’t want to re-read yesterday’s news in…

Over the last couple of weeks, leaders in Kansas and Missouri reached a historic agreement to stop giving away tax subsidies just to entice companies a couple of miles across their shared state line. Meanwhile, policymakers in Alaska resolved a stand-off over education funding...by cutting education funding slightly less. And California voters may be voting in 2020 on a stronger reform to the notoriously inequitable property tax effects of “Proposition 13.”

Several states this year proposed or enacted tax policies that would require high-income households and/or businesses to pay more in taxes. After years of policymaking that slashed taxes for wealthy households and deprived states of revenue to adequately fund public services, this is a necessary and welcome reversal.

Each year, state and local governments spend billions of dollars on targeted tax incentives—special tax breaks ostensibly designed to encourage businesses to relocate, expand or simply stay where they are. A law enacted by the Missouri legislature creates a template for states to work bilaterally to put the brakes on the “race to the bottom” in state business taxes.

Low-income working families got good news and bad news this week, as Earned Income Tax Credit (EITC) enhancements passed in California and advanced in Oregon, while minimum wage increases failed in Pennsylvania, Rhode Island, and Wisconsin. Meanwhile, the momentum for taxing wealth and the very rich continued to grow, as more one-percenters called for enacting progressive taxes, and Inequality.org held a star-studded conference on why and how to do so.

This week saw lawmakers in Ohio propose significant harmful tax cuts, leaders in California and Oregon work toward strengthening the state Earned Income Tax Credits (EITCs), and governors in Missouri and Kansas declare a truce to end the practice of bribing businesses in the Kansas City area with tax cuts to move from one side of the state line to the other. Meanwhile, Massachusetts leaders are discussing ways of raising taxes on their richest households, which our latest Just Taxes blog post notes is a promising trend this year across many states.

Like certain recent controversially concluded television shows, tax and budget debates can end in many ways and often receive mixed reviews. Illinois leaders, for example, ended on a cliffhanger by approving a historic constitutional amendment to create a graduated income tax in the state, whose ultimate conclusion will be crowdsourced by voters next November. Arizona’s fiscal finale fell flat with many observers due to corner-cutting on needed investments and a heavy focus on tax cuts. Texas legislators went for crowd-pleasing property tax cuts and school funding increases but left a gigantic “but how will we pay for this” plot hole…

Lawmakers and advocates can enjoy their barbeques with only one eye on their work email this weekend in states that have essentially finished their budget debates such as Alaska, Minnesota, Nebraska, and Oklahoma, though both Alaska and Minnesota require special sessions to wrap things up. Getting to those barbeques may be a bumpy ride in Louisiana, Michigan, and other states still working to modernize outdated and inadequate gas taxes.

Lawmakers in Illinois and Ohio have advanced major tax proposals but cannot rest just yet, as they must still get past the other legislative chamber. Their counterparts in Michigan, Minnesota, Nebraska, and Oregon, meanwhile, are all at impasses over education funding, as those in Texas left their school funding disagreement unresolved at least until they reconvene...in 2021. And in an era of many states pre-empting smaller jurisdictions by revoking local decision-making powers, leaders in Colorado and Delaware made moves in the opposite direction, entrusting cities and school districts with more local control.

As of 2017, 11.5 million children in the United States were living in poverty. A national, fully-refundable Child Tax Credit (CTC) would effectively address persistently high child poverty rates at the national and state levels. The federal CTC in its current form falls short of achieving this goal due to its earnings requirement and lack of full refundability. Fortunately, states have options to make state-level improvements in the absence of federal policy change. A state-level CTC is a tool that states can employ to remedy inequalities created by the current structure of the federal CTC. State-level CTCs would significantly reduce…

Though a long winter and a rough start to spring weather have wreaked havoc in much of the country, lawmakers are off to a good start in the world of state fiscal policy so far. In the last week, a progressive revenue package was passed in the nick of time in NEW MEXICO, a service-sapping tax cut was vetoed in KANSAS, and a regressive and unsustainable tax shift was soundly defeated in NORTH DAKOTA. Meanwhile, gas tax updates are on the table in MAINE, MINNESOTA, and OHIO. And exemptions for feminine hygiene products and diapers were enacted in VIRGINIA and introduced in MISSOURI. 

More than three billion dollars could be raised under a major progressive tax plan proposed by Illinois Gov. J.B. Pritzker this week, the point being to simultaneously improve the state’s upside-down tax code and address its notorious budget gap issues. One state, Utah, may already be looking at a special session to revisit the sales tax reform debate that ended this week without resolution, in contrast to Alabama and Arkansas, where leaders finally resolved years-long debates over gas taxes and infrastructure funding. And lawmakers in four states – California, Florida, Minnesota, and North Carolina – introduced legislation to expand or…

As another polar vortex heads for large swaths of the country, state tax debates this week were highly polarized in another way. Lawmakers and advocates in MICHIGAN, OHIO, OREGON, UTAH, and elsewhere fought to enact or improve state Earned Income Tax Credits to give a boost to low- and middle-income working families. But the opposite extreme was heavily represented as well, as others pushed for regressive tax cuts for wealthy individuals and corporations, including in KANSAS, NEBRASKA, NORTH DAKOTA, OHIO, UTAH, and WEST VIRGINIA. Even our “What We’re Reading” section has informative reading on how education funding policy continues to…

Tom Robbins called February “the meanest moon of winter, all the more cruel because it will masquerade as spring, occasionally for hours at a time, only to rip off its mask with a sadistic laugh and spit icicles into every gullible face, behavior that grows quickly old.” Observers of state fiscal debates might think he was writing about similarly tiresome regressive tax cut proposals, which recently succeeded in Arkansas and advanced in North Dakota despite improved public understanding of the upside-down nature state tax systems, ineffectiveness of supply-side trickle-down tax cuts, and importance of investing in education. But like February…

Happy Valentine’s Day to all lovers of quality research, sound fiscal policy, and progressive tax reforms! This week, some leaders in ARKANSAS displayed their infatuation with the rich by advancing regressive tax cuts, but others in the state are trying to show some love to low- and middle-income families instead. WISCONSIN lawmakers are devoted to tax reductions for the middle class but have not yet decided how to express those feelings. NEBRASKA legislators are playing the field, flirting with several very different property tax and school funding proposals. And VIRGINIA’s legislators and governor just decided to settle for a flawed…

It’s always troubling for those concerned with adequate and fair public finance systems when states prioritize tax cuts at the cost of divesting in important public priorities and exacerbating underlying tax inequalities. But it’s even more nerve-racking when it happens on the eve of what many consider to be an inevitable economic downturn.

Consumption taxes are a significant source of state and local revenue, and we expect that lawmakers will continue to adjust state consumption tax levies to adapt to budget needs and a changing economy.

In our last update on state responses to the federal tax cut (Tax Cuts and Jobs Act, or TCJA), we noted that several states were waiting until 2019 to make their final decisions, giving them additional time to (hopefully) respond in ways that improve their fiscal situations and upside-down tax codes. The TCJA is affecting the 2018 federal taxes people are filing now, in some cases adding urgency and/or confusion to these debates.

Gubernatorial addresses and the prospect of teacher strikes continued to take center stage in state fiscal news this week, as governors of Connecticut, Maryland, and Utah gave speeches that all included significant tax proposals. Meanwhile, teachers walked out in Virginia, and many other states debated school funding increases to avoid similar results. State policymakers have many other debates on their hands as well, including what to do with online sales tax revenue, how to cut property taxes without undermining schools, whether and how to legalize and tax cannabis, and whether to update gas taxes for infrastructure investments.

Gubernatorial speeches and budget proposals dominated state fiscal news this week, as governors proposed a wide array of policies including positive reforms such as Earned Income Tax Credit (EITC) enhancements in CALIFORNIA, a capital gains tax on wealthy households in WASHINGTON, and investments in education in several states. Proposals to exempt more retirement income from tax, particularly for veterans, are a common theme so far this year, having been raised in multiple states including MARYLAND, MICHIGAN, and SOUTH CAROLINA. And NEW JERSEY became the fourth state with a $15 minimum hourly wage. Those wishing to better understand and influence important debates about equitable tax policy should mark their…

Enacting Worldwide Combined Reporting or Complete Reporting in all states, this report calculates, would increase state tax revenue by $17.04 billion dollars. Of that total, $2.85 billion would be raised through domestic Combined Reporting improvements, and $14.19 billion would be raised by addressing offshore tax dodging (see Table 1). Enacting Combined Reporting and including known tax havens would result in $7.75 billion in annual tax revenue, $4.9 billion from income booked offshore.