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brief
February 11, 2016
Rewarding Work Through State Earned Income Tax Credits
See the 2016 Updated Brief Here Read the brief in a PDF here. that time, the EITC has been improved to lift and keep more… -
report
February 11, 2016
Tax Foundation Model Seeks to Revive Economic Voodoo
In recent months, the Tax Foundation has used its Taxes and Growth Model (TAG Model) to estimate the impact that a variety of tax policy changes would have on the nation’s economy–including tax plans proposed by current presidential candidates.
The Tax Foundation describes the underlying “logic” of its TAG Model as being rooted in the assumption that “taxes have a major impact on economic growth.” More specifically, the TAG Model has concluded that proposals to lower taxes for high-income individuals and businesses would dramatically grow the economy, and that proposals to raise taxes would significantly slow economic growth.
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brief
February 5, 2016
How Long Has it Been Since Your State Raised Its Gas Tax?
Many states’ transportation budgets are in disarray, in part because they are trying to cover the rising cost of asphalt, machinery, and other construction materials with a gasoline tax rate that is rarely increased. A growing number of states have recognized the problem with this approach and have switched to a “variable-rate” gas tax under which the tax rate tends to rise over time alongside either inflation or gas prices. A majority of Americans live in a state where the gas tax is automatically adjusted in this way.
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brief
February 5, 2016
Most Americans Live in States with Variable-Rate Gas Taxes
The federal government and many states are seeing shortfalls in their transportation budgets in part because the gasoline taxes they use to generate those funds are poorly designed. Thirty-one states and the federal government levy “fixed-rate” gas taxes where the tax rate does not change even as the cost of infrastructure materials inevitably increases over time. The federal government’s 18.4 cent gas tax, for example, has not increased in over 22 years. And twenty states have gone a decade or more without a gas tax increase.
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blog
January 28, 2016
Michigan's "Customer" Service Fail Is a Cautionary Tale about Cutting Taxes and Disinvestment
The Michigan legislature just approved a $28 million appropriation to provide immediate aid in response to the water crisis in Flint, Mich., where vulnerable children… -
report
January 19, 2016
Testimony before the Vermont Senate Committee on Finance: Tax Policy Issues with Legalized Retail Marijuana
Thank you for the opportunity to testify on the tax policy issues associated with legalized retail marijuana. Our testimony includes five parts:
1. An overview of the marijuana tax rates and structures that exist in the four states (Alaska, Colorado, Oregon, and Washington) where retail marijuana can be legally sold.
2. An analysis of early stage revenue trends in the two states (Colorado and Washington) where legal, taxable sales of retail marijuana have been taking place since 2014.
3. A discussion of issues associated with different types of marijuana tax bases–specifically weight-based taxes, price-based taxes, and hybrids of these two structures.
4. A discussion of issues involved in choosing a tax rate for marijuana.
5. A discussion of long-run issues related to the structure of marijuana taxes and their revenue yield. -
report
January 13, 2016
ITEP Comments to the Vermont Senate Committee on Finance: Tax Expenditure Evaluation
Thank you for the opportunity to comment on Vermont’s effort to establish a system for regularly evaluating its tax expenditure programs. Data-driven tax expenditure evaluations are a valuable tool for gauging the effectiveness of policy initiatives pursued via the tax code. ITEP is supportive of Vermont’s efforts in this area and is generally encouraged by the work completed thus far by groups such as the Joint Fiscal Office and the Pew Charitable Trusts. Rather than rehash the many useful recommendations made by those organizations, these comments focus on two areas that may be in need of further attention: the scope of what is labeled a “tax expenditure,” and the importance of data infrastructure advancements to the success of these evaluations.
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report
December 10, 2015
Delaware: An Onshore Tax Haven
When thinking of tax havens, one generally pictures notorious zero-tax Caribbean islands like the Cayman Islands and Bermuda. However, we can also find a tax haven a lot closer to home in the state of Delaware – a choice location for U.S. business formation. A loophole in Delaware’s tax code is responsible for the loss of billions of dollars in revenue in other U.S. states, and its lack of incorporation transparency makes it a magnet for people looking to create anonymous shell companies, which individuals and corporations can use to evade an inestimable amount in federal and foreign taxes. The Internal Revenue Service estimated a total tax gap of about $450 billion with $376 billion of it due to filers underreporting income in 2006 (the most recent tax year for which this data is available).[i] While it is impossible to know how much underreported income is hidden in Delaware shell companies, the First State’s ability to attract the formation of anonymous companies suggests that it could rival the amount of income hidden in more well-known offshore tax havens.
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brief
October 20, 2015
A Primer on State Rainy Day Funds
Read the Report in PDF Form An individual savings account can serve as an emergency reserve – a financial cushion to sustain yourself in the… -
report
September 17, 2015
State Tax Codes As Poverty Fighting Tools
The U.S. Census Bureau released data in September showing that the share of Americans living in poverty remains high. In 2014, the national poverty rate was 14.8 percent – statistically unchanged from the previous year. However, the poverty rate remains 2.3 percentage points higher than it was in 2007, before the Great Recession, indicating that recent economic gains have not yet reached all households and that there is much room for improvement. The 2014 measure translates to more than 46.7 million – more than 1 in 7 – Americans living in poverty. Most state poverty rates also held steady between 2013 and 2014 though twelve states experienced a decline.