New York

It’s time for a new approach. Trump’s egregious tax avoidance further exposes a system that preserves an enormous and growing economic divide. Congress has gutted IRS funding so that we don’t have the resources to audit wealthy tax avoiders. And lobbyists continue to secure giveaways for corporate clients that do nothing for our communities.

"The New York Times revelation of Trump’s years of dodging taxes confirms something we already know. There are two tax systems: one that most of us follow, and another far more generous one for the very rich."

New Jersey leaders grabbed the biggest headlines of the week by finally agreeing to implement a much-needed and long-discussed millionaires tax to shore up the budget and improve tax fairness. And Illinois residents can begin voting tomorrow to enact a graduated income tax there. Relatedly, ITEP Research Director Carl Davis updated our research debunking the myth that progressive taxes interfere with economic growth. Cannabis legalization and taxation was a hot topic as well, as lawmakers in Vermont reached an agreement to move forward on the matter and others in Connecticut, Kansas, and New Hampshire worked toward the same.

ITEP updated a 2017 study that examined the economic performance of the nine states with the highest top marginal tax rates compared to the nine states with no state income tax. Economies in states with the highest top marginal rates grew faster. States facing budget shortfalls should first look at raising taxes on those most able to pay (incomes at the top have grown during this economic crisis) before considering harmful budget cuts.

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 amplified as many states have enacted and expanded their own credits.

Racial justice requires tax justice. Economic justice requires tax justice. Climate and health justice require, yes, tax justice.

Readers may want to start with our “What We’re Reading” section this week, which is full of good reading on how progressive taxation is needed to fund vital public services, helpful for state and local economic growth, and popular among voters as well. In that spirit, leaders in both New Jersey and New York are looking at small taxes on stock trades to help improve their budgets and tax codes. These last couple of weeks have also featured more state fiscal action than is typical this time of year, for example in North Carolina, where lawmakers decided to use federal…

Although the 2017 Tax Cuts and Jobs Act has created a slew of problems, it is now clear that a mass migration of top earners out of higher-tax blue states is not one of them.

Reductions in critical state and local investments, including health care and education, would only exacerbate the economic crisis brought on by COVID-19 and worsen racial and income inequality for years to come. Higher taxes on top earners are among the best options for addressing pandemic-related state revenue shortfalls in the coming months.

Voters could significantly change the tax landscape through ballot measures this November regarding oil taxes in Alaska and a high-income surcharge for education funding in Arizona. Legislators are doing their part to bring progressive tax ideas to the fore as well, including a possible wealth tax in California, a millionaires tax in New Jersey, and a pied-a-terre proposal in New York. And Nebraska lawmakers reached a property tax and business tax subsidy compromise before closing out their session, but did not identify progressive revenue sources to fund it and will likely be back at the bargaining table before long.

Republicans continue to tout Opportunity Zones as their main vehicle to assist poor people, most recently with a deeply flawed report from President Trump’s White House Council of Economic Advisors and a mention from Donald Trump Jr. in his opening night convention speech. The report purports to compare—as a way of cutting poverty—tax breaks for investors vs food, cash or health insurance coverage for struggling families.

This week, voters in Missouri approved Medicaid expansion, Nevada lawmakers moved to amend their Constitution to raise taxes on the state’s mining industry, and leaders in California and New York continued to push for needed revenues through tax increases on their richest households.

Lawmakers in many states have enacted “sales tax holidays” (16 states will hold them in 2020) to provide a temporary break on paying the tax on purchases of clothing, school supplies, and other items. These holidays may seem to lessen the regressive impacts of the sales tax, but their benefits are minimal while their downsides are significant—and amplified in the context of the COVID-19 pandemic. This policy brief looks at sales tax holidays as a tax reduction device.

Temperatures and tensions are high right now across the country as Congress debates its next pandemic response and states continue to sweat through difficult decisions. Nevada lawmakers, for example, just wrapped up a special session during which they came within one vote of a proposed tax increase but ultimately chose to balance their shortfall through only funding cuts. But advocates in many states, including California, New Jersey, New York, and Rhode Island are trying to light a fire under lawmakers to encourage them to enact progressive tax increases on their wealthiest households.

With tax day finally coming at the federal level and in many states this week, policymakers in Nevada and New Jersey began to talk about revenue solutions to their revenue shortfalls, even if they fell well short of wholeheartedly backing needed reforms. Like their counterparts in most states, they remain primarily focused on temporary solutions to their short-term emergencies. Still, advocates in these and other states continue to push for more fundamental fixes to their inadequate and upside-down tax codes, including a new campaign for better tax policy in Massachusetts and efforts to rein in tax subsidies and loopholes in…

July 1—the start of the new fiscal year in most states—typically marks a point when one can take a step back and reflect on the wins and disappointments of the past state legislative sessions. 2020 is markedly different. Nationwide business closures and stay-at-home orders in response to COVID-19 have led to unprecedented spikes in unemployment, decreased demand for consumer spending, and increased demand for vital public services. As a result, states face incredibly uncertain financial futures with little clarity regarding how their tax collections will fare over the next year.

State policymakers this week took a variety of approaches to their fiscal situations amid the COVID-19 pandemic. Tennessee lawmakers chose to balance their budget through $1.5 billion in cuts to public services, but not before adding to those cuts by going forward with planned tax cuts. California legislators also passed a budget but relied on a number of temporary measures and delays to do so. Their counterparts in Massachusetts, New Jersey, and Rhode Island opted for interim budgets to tide them over for a few months while they continue to look for lasting solutions. Meanwhile, many states are debating whether…

The U.S. Supreme Court last week halted an effort by the Trump administration that would have stripped DACA (Deferred Action for Childhood Arrivals) recipients of their lawful status in the country. The 5-4 ruling is a significant victory for immigrant rights advocates and over 643,000 Dreamers—as they’re known—who were brought here as children and have […]