The vast majority of state and local tax systems are upside-down, with the wealthy paying a far lesser share of their income in taxes than low- and middle-income families. Yet a few states have made strides to buck that trend and have tax codes that are somewhat progressive and therefore do not worsen inequality.
Carl Davis
Carl Davis is the research director at ITEP, where he has worked since 2008. Carl works on a wide range of issues related to both state and federal tax policy. He has advised policymakers, researchers, and advocates on tax policy issues in nearly every state. Much of his work relates to the link between taxes and economic growth, and the shortcomings of dynamic scoring and supply-side economic theories.
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blog January 9, 2024 In Most States, the Tax Code Makes Inequality Worse
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brief November 7, 2023 Far From Radical: State Corporate Income Taxes Already Often Look Beyond the Water’s Edge
State lawmakers are increasingly interested in reforming their corporate tax bases to start from a comprehensive measure of worldwide profit. This provides a more accurate, and less gameable, starting point for calculating profits subject to state corporate tax. Mandating this kind of filing system, known as worldwide combined reporting (WWCR), would be transformative, as it would all but eliminate state corporate tax avoidance done through the artificial shifting of profits into low-tax countries.
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brief November 2, 2023 America Used to Have a Wealth Tax: The Forgotten History of the General Property Tax
Over time, broad wealth taxes were whittled away to become the narrower property taxes we have today. These selective wealth taxes apply to the kinds of wealth that make up a large share of middle-class families’ net worth (like homes and cars), but usually exempt most of the net worth of the wealthy (like business equity, bonds, and pooled investment funds).The rationale for this pared-back approach to wealth taxation has grown weaker in recent decades as inequality has worsened, the share of wealth held outside of real estate has increased, and the tools needed to administer a broad wealth tax have improved.
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ITEP Work in Action October 22, 2023 ITEP’s Carl Davis: Who Pays New Mexico Taxes?
ITEP Research Director Carl Davis gave a presentation on New Mexico’s tax system to that state’s Revenue Stabilization and Tax Policy Committee on October 19, 2023. Click here for the… -
media mention October 20, 2023 Wall Street Journal: How Will States Pay for Roads When Gas Taxes Evaporate?
As electric vehicles become more popular and gasoline sales decline, governments are struggling to find new ways to fund infrastructure. Read more. -
media mention October 15, 2023 Forbes: Mapping Billionaire Wealth: Where The Richest Americans Live Now Vs. Two Decades Ago
Extreme wealth has been consolidating in the United States. Read more. -
map August 15, 2023 Does Your State Offer Tax Credits for Private K-12 School Voucher Contributions?
Twenty-one states provide public support to private and religious K-12 schools through school voucher tax credits.
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ITEP Work in Action August 8, 2023 Video: ITEP’s Carl Davis Presents ‘Tax Policy to Reduce Racial Retirement Wealth Inequality’ at UPenn’s Wharton School
ITEP Research Director Carl Davis presents “Tax Policy to Reduce Racial Retirement Wealth Inequality,” coauthored with ITEP’s Brakeyshia Samms, at the 2023 Pension Research Council Symposium “Diversity, Inclusion, and Inequality:… -
blog June 12, 2023 Illinois Voucher Tax Credits Don’t ‘Invest in Kids,’ They Invest in Inequality
By allowing their school privatization tax credit to expire at the end of the year, Illinois lawmakers can take a meaningful step toward better tax and education policy, and a clear show of support for our nation’s public education system.
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media mention May 16, 2023 The Texas Tribune: Why Tax Policy Experts Fear the Texas House Plan to Lower Property Taxes Could Have Dire Ripple Effects
Both the House and the Senate’s proposals on property tax cuts would give modest savings to the typical Texas homeowner, but critics say the House plan could create vast inequities… -
blog May 11, 2023 States are Talking About the Wrong Kind of Property Tax Cuts
Concerns over property tax affordability have been at the forefront this year as housing prices have climbed and property tax bills have often increased along with them. As lawmakers mull a range of property tax cuts, circuit breakers are the best possible approach—and these policies are receiving far too little attention in the states.
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report May 11, 2023 Preventing an Overload: How Property Tax Circuit Breakers Promote Housing Affordability
Circuit breaker credits are the most effective tool available to promote property tax affordability. These policies prevent a property tax “overload” by crediting back property taxes that go beyond a certain share of income. Circuit breakers intervene to ensure that property taxes do not swallow up an unreasonable portion of qualifying households’ budgets.
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map April 19, 2023 How is Adult-Use Cannabis Taxed by Your Local Government?
Twenty states have legalized the sale of cannabis for general adult use. Cannabis taxes vary considerably depending on local authority. Some states allow local governments to levy standalone excise taxes applying narrowly to cannabis purchases. Most local excise taxes on cannabis are levied in states that do not permit local governments to levy general sales taxes.
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map April 19, 2023 How is Adult-Use Cannabis Taxed in Your State?
Twenty states have legalized cannabis sales for general adult use. Every state allowing legal sales applies a cannabis tax based on the product’s quantity, its price, or both. ITEP research indicates that taxes based on quantity will be more sustainable over time because prices are widely expected to fall as the cannabis industry matures.
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blog March 31, 2023 Minnesota’s Tax Code Should Be Based on Ability to Pay, Not Year of Birth
Minnesota lawmakers are considering a carveout that would treat seniors much more favorably than young families. The proposal would fully exempt all Social Security income from state income tax, even for seniors with exceptionally high incomes.
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blog March 23, 2023 States Prioritize Old Over Young in Push for Larger Senior Tax Subsidies
Under a well-designed income tax based on ability to pay, it is simply not necessary to offer special tax subsidies to older adults but not younger families. At the end of the day, your income tax bill should depend on what you can afford to pay, not the year you were born. It’s really as simple as that.
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report March 23, 2023 State Income Tax Subsidies for Seniors
State governments provide a wide array of tax subsidies to their older residents. But too many of these carveouts focus on predominately wealthy and white seniors, all while the cost climbs.
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media mention March 13, 2023 Kansas Legislators’ War on the Poor Opens Worrisome New Front: School Vouchers and Tax Avoidance
Kansas legislative leaders have declared war on the poor. They have pushed bills penalizing those receiving government assistance through the House Welfare Reform Committee. They have advocated a flat tax plan that benefits… -
brief March 3, 2023 Tax Avoidance Continues to Fuel School Privatization Efforts
Wealthy families are overwhelmingly the ones using school voucher tax credits to opt out of paying for public education and other public services and to redirect their tax dollars to private and religious institutions instead. Most of these credits are being claimed by families with incomes over $200,000.
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blog February 28, 2023 Dear Ohio: Beware the Flat Tax
The flat tax plan and others being discussed that would cut even deeper would be windfalls for the wealthy, and expensive ones at that. Families with incomes over $300,000 per year, for example, could expect to gain, as a group, about a billion dollars annually under the flat tax plan. If you asked Ohio families about their top priorities for this legislative session, it’s a safe bet that very few of them would choose a billion-dollar tax cut for this group over funding for schools, parks, and infrastructure.
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media mention February 28, 2023 Wall Street Journal: New Jersey Is Latest State to Push Tax Relief Despite Economic Uncertainty
New Jersey Gov. Phil Murphy on Tuesday will propose another $2 billion in property-tax rebate checks as part of a $53 billion state budget, a state treasury official said, making it the… -
blog February 22, 2023 The Five Best Tax Ideas Coming from Governors This Year
The word “tax” appears 97 times and counting in one recent summary of governors’ addresses to state legislators so far this year. The policy visions that governors are bringing, however, vary enormously. While there’s good reason to worry about tax cuts for wealthy families and the flattening or elimination of income taxes, there are at least five great tax ideas coming directly out of governors’ offices this year.
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January 30, 2023 The Geographic Distribution of Extreme Wealth in the U.S. Excessive concentration of wealth runs counter to our national aspiration for genuine equality of opportunity, and it saps the vitality of… -
media mention January 26, 2023 Wisconsin Examiner: Tax Analyst Says Flat-Rate System Will Benefit Wealthy at the Expense of the Majority
The wealthiest Wisconsin residents already pay a smaller share of their incomes in state taxes than the rest of the population, and replacing the state’s current graduated-rate income tax structure… -
brief January 17, 2023 The Pitfalls of Flat Income Taxes
Flat taxes have some surface appeal but come with significant disadvantages. Critically, a flat tax guarantees that wealthy families’ total state and local tax bill will be a lower share of their income than that paid by families of more modest means.