In announcing a new tax cut framework this week in Indianapolis that was negotiated with House and Senate leaders, President Trump claimed that “Indiana is a tremendous example of the prosperity that is unleashed when we cut taxes and set free the dreams of our citizens …. In Indiana, you have seen firsthand that cutting taxes on businesses makes your state more competitive and leads to more jobs and higher paychecks for your workers.”
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 September 29, 2017 Indiana’s Tax Cuts Under Mike Pence Are Not a Model for the Nation
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blog August 30, 2017 Private School Voucher Credits Offer a Windfall to Wealthy Investors in Some States
State lawmakers who want to send public dollars to private schools have devised a shrewd tactic for getting around political and constitutional obstacles that make it difficult to do so.… -
blog August 9, 2017 It’s a Fact: Voucher Tax Credits Offer Profits for Some “Donors”
In nine states, tax rewards gained by donating to fund private K-12 vouchers are so oversized that “donors” can turn a profit. This is the shocking but true finding of a pair of studies released by ITEP over the last year.
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blog June 29, 2017 CBO Just Shot Down Trump’s Economic Forecast
Last month, the Trump Administration released a budget proposal that relies on unrealistic projections of economic growth to create the illusion that it will balance the budget by 2027. By making the federal budget outlook appear more favorable than it actually is, the administration is seeking to bolster its case for enacting a multi-trillion-dollar tax cut. Fortunately, Congress has its own independent forecaster that just chimed in with a more rational assessment of the economy.
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report June 29, 2017 Trump Budget Uses Unrealistic Economic Forecast to Tee Up Tax Cuts
The Trump Administration recently released its proposed budget for Fiscal Year 2018. The administration claims that its proposals would reduce the deficit in nearly every year over the next decade before eventually achieving a balanced budget in 2027, but the assumptions it uses to reach this conclusion are deeply flawed. This report explains these flaws and their consequences for the debate over major federal tax changes.
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blog June 28, 2017 Gas Taxes Will Rise in 7 States to Fund Transportation Improvements
Summer gas prices are at their lowest level in twelve years, which makes right now a sensible time to ask drivers to pay a little more toward improving the transportation infrastructure they use every day. Seven states will be doing this on Saturday, July 1 when they raise their gasoline tax rates. At the same time, two states will be implementing small gas tax rate cuts.
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brief June 28, 2017 How Long Has It Been Since Your State Raised Its Gas Tax?
Many state governments are struggling to repair and expand their transportation infrastructure because they are attempting to cover the rising cost of asphalt, machinery, and other construction materials with fixed-rate gasoline taxes that are rarely increased.
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blog June 22, 2017 Explaining our Analysis of Washington State’s Highly Regressive Tax Code
Supporters of creating a local personal income tax in Seattle are rightly concerned about the lopsided nature of their state’s tax code. In a 50-state study titled Who Pays?, produced using our microsimulation tax model, we found that Washington State’s tax system is the most regressive in the nation.
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blog May 17, 2017 Investors and Corporations Would Profit from a Federal Private School Voucher Tax Credit
A new report by the Institute on Taxation and Economic Policy (ITEP) and AASA, the School Superintendents Association, details how tax subsidies that funnel money toward private schools are being… -
report May 17, 2017 Public Loss Private Gain: How School Voucher Tax Shelters Undermine Public Education
One of the most important functions of government is to maintain a high-quality public education system. In many states, however, this objective is being undermined by tax policies that redirect public dollars for K-12 education toward private schools.
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blog May 10, 2017 Gas Taxes Increases Continue to Advance in the States
This post was updated July 12, 2017 to reflect recent gas tax increases in Oregon and West Virginia.
As expected, 2017 has brought a flurry of action relating to state gasoline taxes. As of this writing, eight states (California, Indiana, Montana, Oregon, South Carolina, Tennessee, Utah, and West Virginia) have enacted gas tax increases this year, bringing the total number of states that have raised or reformed their gas taxes to 26 since 2013. -
blog April 25, 2017 Income Tax Offers Best Bang for the Buck in Alaska
Earlier this month the Alaska House of Representatives voted 22-17 in favor of implementing a personal income tax for the first time in over 35 years. Gov. Bill Walker praised… -
report April 24, 2017 Comparing the Distributional Impact of Revenue Options in Alaska
Alaska is facing a significant budget gap because of a sharp decline in the oil tax and royalty revenue that has traditionally been relied upon to fund government. This report examines five approaches for replacing some of the oil revenue that is no longer available: enacting a broad personal income tax, state sales tax, payroll tax, investment income tax, or cutting the Permanent Fund Dividend (PFD). Any of the options examined in this report could make a meaningful contribution toward closing Alaska’s budget gap. To allow for comparisons across options, this report examines policy changes designed to generate $500 million annually. This amount would be insufficient to close Alaska’s $3 billion budget gap, but any of these options could be modified to raise additional revenue, or could be incorporated into a larger package of changes designed to close the gap.
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blog March 29, 2017 Seeking the Right Balance in Alaska
It’s been a little over a year since Alaska Gov. Bill Walker proposed implementing a state personal income tax for the first time in 35 years, and the idea is now… -
blog March 29, 2017 The April Fool’s Joke Is on Consumers: April 1 Marks Record-Breaking Procrastination on Federal Gas Tax Policy
It’s only appropriate that April 1 will mark a new milestone in foolish federal transportation infrastructure policy. On Saturday, the nation’s federal gasoline tax rate will have been stuck at… -
report March 28, 2017 Assessing the Distributional Consequences of Alaska’s House Bill 115 (Version L)
This report contains ITEP’s analysis of the distributional and revenue consequences of the revised version of House Bill 115 (Version L) as proposed on March 23, 2017. This proposal would reduce Alaska’s Permanent Fund Dividend (PFD) payout and implement a personal income tax based on a modified version of Federal Adjusted Gross Income, with rates ranging from 0 to 7 percent. The analysis was produced using ITEP’s Microsimulation Tax Model.
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blog March 23, 2017 Taxing the Gig Economy
Our ever-changing economy demands that lawmakers update our tax laws to keep pace. Take, for example, the growth of online sales. As recently as six years ago, Amazon, the nation’s… -
blog March 21, 2017 Amazon Will Collect Every State Sales Tax by April 1
For decades, Amazon.com helped its customers dodge the sales taxes they owed to gain an advantage over its competitors. But as the company’s business strategy has changed, so has its… -
report March 15, 2017 Taxes and the On-Demand Economy
A growing number of Americans are getting rides or booking short-term accommodations through online platforms such as Uber and Airbnb. This is nothing new in concept; brokers have operated for hundreds of years as go-betweens for producers and consumers. The ease with which this can be done through the Internet, however, has led to millions of people using these services, and to some of the nation’s fastest-growing, high-profile businesses.
The rise of this on-demand sector, sometimes referred to as the “gig economy” or, by its promoters, the “sharing economy,” has raised a host of questions. For state and local governments, one of them is: How do the services provided by these companies fit into the current tax system? All three of the major categories of revenue sources relied upon by state and local governments, including consumption taxes, income taxes, and property taxes, are impacted to some extent by the on-demand economy. While Uber, Airbnb, and similar on-demand companies are still relatively small in relation to the overall U.S. economy (accounting for 0.5 percent of the U.S. workforce), they are large enough to have a meaningful impact on state tax collections, and their explosive growth and entry into new lines of business will amplify their importance in the years ahead.
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report February 9, 2017 State Gasoline Taxes: Built to Fail, But Fixable
Every state levies taxes on gasoline and diesel fuel, usually just called “gas taxes.” These taxes are an important source of state revenue–particularly for transportation–but their poor design has resulted in sluggish revenue growth that fails to keep pace with state infrastructure needs. This ITEP Policy Brief explains how state gas taxes work, their importance as a transportation revenue source, the problems confronting gas taxes, and the types of gas tax reforms that are needed to overcome these problems.
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blog February 6, 2017 Dodging Tough Fiscal Decisions with State Tax Cut Triggers and Phase-Ins
The most challenging problem that tax-cutting state lawmakers face is dealing with the budgetary tradeoffs that tax cuts require. Should education spending be reduced? Should investments in infrastructure be halted?… -
blog February 2, 2017 What to Watch in the States: Gas Tax Hikes and Swaps
This is the second installment of our six part series on 2017 state tax trends. The introduction to this series is available here. State tax policy can be a divisive… -
blog January 30, 2017 And Then There Were Six: Amazon Expands Its Sales Tax Collection
UPDATE: After this post was published, Amazon announced that it will begin collecting sales tax in Oklahoma on March 1. This post has been updated to reflect this development. The… -
blog January 26, 2017 A Visual Tour of Who Pays State & Local Taxes
While it can be hard to look away from the important federal policy debates occurring right now in Washington D.C., state lawmakers across the country will also be debating consequential… -
report January 26, 2017 Fairness Matters: A Chart Book on Who Pays State and Local Taxes
When states shy away from personal income taxes in favor of higher sales and excise taxes, high-income taxpayers benefit at the expense of low- and moderate-income families who often face above-average tax rates to pick up the slack. This chart book demonstrates this basic reality by examining the distribution of taxes in states that have pursued these types of policies. Given the detrimental impact that regressive tax policies have on economic opportunity, income inequality, revenue adequacy, and long-run revenue sustainability, tax reform proponents should look to the least regressive, rather than most regressive, states in crafting their proposals.