March 17, 2021
“Basically any tax cut done at the state level has doubled in cost,” said Carl Davis, research director at the Institute on Taxation and Economic Policy. For example, if a state enacts a $50 million tax cut, it will lose $50 million in the revenue it won’t collect and another $50 million in federal aid.
Under the ARP, these tax cuts will either have to wait until 2024 or be offset by other revenue-raising measures, or they will cost the state double what they would have originally cost.
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