New Jersey

Many of yesterday’s Election Day votes came down to questions of whether or not to improve on upside-down and often inadequate state and local tax systems. The status quo was maintained in Colorado, where voters failed to approve a proposition to allow the state to invest tax revenue in education and other needs, and in Texas, where a constitutional amendment was approved to prohibit the state from creating an income tax. But voters supported important reforms in other states by approving needed funding for schools in Idaho, opting to legalize and tax recreational cannabis in California. And for more on…

Lawmakers in Michigan and New Hampshire made progress toward enacting their state budgets, though Michigan may yet end up in a government shutdown. Leaders in Wyoming advanced a proposal to create a limited tax on large corporations to raise some revenue and add a progressive element to their state’s tax code. Georgia agencies are forced to recommend their own funding cuts amid state income tax cuts. And business tax subsidies are looking particularly bad in Maryland, where subsidy money has been handed out without verification that companies were creating jobs, and New Jersey, where a false threat to leave the…

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.

The Earned Income Tax Credit (EITC) is a policy designed to bolster the incomes of low-wage workers and offset some of the taxes they pay, providing the opportunity for families struggling to afford the high cost of living 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.

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…

A new report reveals that a city-level, Chicago Earned Income Tax Credit would boost the economic security of 546,000 to 1 million of the city’s working families. ITEP produced a cost and distributional analysis of six EITC policy designs, which outlines the average after-tax income boost for families at varying income levels. The most generous policy option would increase after-tax income for more than 1 million working families with an average benefit, depending on income, ranging from $898 to $1,426 per year.

The vast majority of state and local tax systems exacerbate the economic divide by taxing low- and middle-income families at higher rates than the wealthy. This map distills an exhaustive analysis of state and local tax codes into one key number, the ITEP Tax Inequality Index, to show the degree to which each state’s tax […]

The hottest, stickiest month of the year has left a grimy feeling on several state tax debates, as Idaho lawmakers find themselves unable to fund the state’s priorities after years of cutting taxes, Alaskans express their support for public investments to their governor’s polling office and then watch the governor slash them anyway, New Jersey lawmakers go to bat for ineffective and corrupt business tax subsidies, and residents of North Carolina watch their representatives pursue cheap political points over sound investments and thoughtful policy. Nonetheless, residents and advocates on the other side of these and other debates have fought long…

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.

Ohio now enjoys the distinction of being the 30th state to raise or reform its gas tax this decade, and the third state to do so this year, under a bill signed into law by Gov. Mike DeWine. While state tax policy can be a contentious topic, there has been a remarkable level of agreement on the gasoline tax. Increasingly, state lawmakers are deciding that outdated gas taxes need to be raised and reformed to fund infrastructure projects that are vital to their economies. These actions are helping reverse losses in gas tax purchasing power caused by rising construction costs…

The flawed design of federal and state gasoline taxes has made it exceedingly difficult to raise adequate funds to maintain the nation’s transportation infrastructure. Twenty-eight states and the federal government levy fixed-rate gas taxes where the tax rate does not change even when the cost of infrastructure materials rises or when drivers purchase more fuel-efficient vehicles and pay less in gas tax. The federal government’s 18.4-cent gas tax, for example, has not increased in over 25 years. Many states have waited a decade or more since last raising their own gas tax rates.

A House Ways and Means subcommittee hearing on Tuesday will explore a highly controversial provision of the Tax Cuts and Jobs Act (TCJA) that prevents individuals and families from writing off more than $10,000 in state and local tax (SALT) payments on their federal tax forms each year. The focus of the hearing will be whether the cap negatively affects state and local revenue streams that fund schools, firefighters, and other services. There are at least three ways this could happen though only one of those is plausible, and it’s not the one that the organizers of this hearing likely…

As Americans observe Juneteenth today–the day two years after the Emancipation Proclamation on which news of the end of the Civil War and slavery reached some of the last slaves in Texas—most people’s attention should be on celebrating victories, remembering losses, gathering strength to continue the fight for racial justice, and the accompanying Congressional reparations hearings. In comparison, state tax debates over matters such as reluctance to invest in infrastructure in Michigan and Missouri, approval of income tax cuts in Wisconsin, and a budget standoff in New Jersey may seem unimportant and irrelevant. But we encourage our readers to think about how state policies often serve to enrich and empower white and wealthy households, and…

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.

States are putting evidence into practice with multiple efforts to improve services and tax codes through more progressive taxes on the wealthy. Clear evidence has spread widely this year, informing a national conversation about progressive taxation and leading lawmakers in multiple states to eschew supply-side superstition and act on real evidence instead. Taxing the rich works, and in this Just Taxes blog we review state-level efforts to put these proven findings into effect.

Today the Internal Revenue Service (IRS) released its final regulations cracking down on a tax shelter long favored by private and religious K-12 schools, and more recently adopted by some “blue state” lawmakers in the wake of the 2017 Trump tax cut. The regulations come more than a year after the IRS first announced the […]

Illinois made big news in several tax and budget areas recently, including sending a graduated income tax amendment to voters in 2020, as well as legalizing and taxing cannabis and updating gas and cigarette taxes for infrastructure improvements. Connecticut made smaller waves with sales tax reforms, a plastic bag tax, and a progressive mansion tax. Property tax credits were proposed in both Maine and New Jersey. And Nevada extended a business tax to give teachers a raise. And our What We’re Reading section is brimming with good reads on how states are doing with recovering from the Great Recession, funding…

Income inequality continues to be an undercurrent in public discourse about our economy and how working families are faring. It drove the national debate over the 2017 Tax Cuts and Jobs Act, which, mounds of data reveal has exacerbated the problem. Some elected federal officials have responded to this step backward with calls for higher […]

After states implemented laws that allow taxpayers to circumvent the new $10,000 cap on deductions for state and local taxes (SALT), the IRS has proposed regulations to address this practice. It’s a safe bet the IRS will try to crack down on the newest policies that provide tax credits for donations to public education and other public services, but it remains to be seen whether new regulations will put an end to a longer-running practice of exploiting tax loopholes in some states that allow public money to be funneled to private schools.

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…

Because of these reforms, more than 193 million people (or 59 percent of the U.S. population) now live in places where the state gas tax rate automatically varies over time.

Tax and budget negotiations remain at standstills in Louisiana and Minnesota, as school funding debates and teacher protests again captured headlines in several states. Oregon lawmakers, for example, finally passed a mixed-bag tax package that won’t improve tax equity but will raise much-needed revenue for education. Meanwhile their counterparts in Nebraska continue to debate highly […]

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…