Carl Davis

blog January 25, 2017
47 Years Later, Alaska Considers Playing Catch-Up with its Motor Fuel Tax

Alaska Gov. Bill Walker recently proposed tripling the gasoline and diesel tax rates paid by Alaska motorists to generate funding for the state’s infrastructure. In a different state, tripling the…
report January 25, 2017
Alaska’s Motor Fuel Tax: A National and Historical Outlier

Alaska Gov. Bill Walker recently proposed tripling his state’s motor fuel tax rates.[1] While a variety of fuel types would be affected by this proposal, three-fourths (or $60 million) of the revenue raised each year would come from higher taxes on gasoline and diesel fuel–sometimes referred to as highway fuels–purchased by Alaska motorists.

Absent any national or historical context, tripling Alaska’s gasoline and diesel fuel tax rates may sound like a radical policy change. But an adjustment of this size is necessary because Alaska lawmakers have not updated the state’s basic highway fuel tax rate since May 1970–almost 47 years ago.[2] Because of this inaction, Alaska’s highway fuel tax has become an outlier when compared to other states’ tax rates, or when compared to Alaska’s own history.

This brief discusses four ways in which Alaska’s highway fuel tax is an outlier:
brief January 17, 2017
Most Americans Live in States with Variable-Rate Gas Taxes

The federal government and many states are unable to adequately maintain the nation’s transportation infrastructure in part because the gasoline taxes intended to fund infrastructure projects are often poorly designed. Thirty states and the federal government levy fixed-rate gas taxes where the tax rate does not change even when the cost of infrastructure materials rises or when drivers transition toward more fuel-efficient vehicles and pay less in gas tax. The federal government’s 18.4 cent gas tax, for example, has not increased in over twenty-three years. Likewise, more than twenty states have waited a decade or more since last raising their own gas tax rates.
brief January 17, 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.

The chart accompanying this brief shows (as of January 1, 2017) the number of years that have elapsed since each state’s gas tax was last increased.
brief November 18, 2016
Collecting Sales Taxes Owed on Internet Purchases

Retail trade has been transformed by the Internet. As the popularity of “e-commerce” (that is, transactions conducted over the Internet) has grown, policymakers have engaged in a heated debate over how state and local sales taxes should be applied to these transactions. This debate is of critical importance for states as sales taxes comprise close to one-third of all state tax revenues and hundreds of billions of dollars in retail spending is now occurring online.
report October 28, 2016
The Short and Sweet on Taxing Soda

The concept of taxing sodas and other sugary beverages has gained traction recently across the United States and around the world. The World Health Organization officially recommended a tax on sugar sweetened beverages as a way to battle the obesity epidemic. In the US, multiple states and localities have looked to taxes on sugar sweetened beverages as a way to improve public health and increase revenue. In 2014, Berkeley, California became the first U.S. locality to enact such a tax. In 2016, similar taxes were enacted in Boulder, Colorado; Albany, Oakland, and San Francisco, California; Cook County, Illinois; and Philadelphia, Pennsylvania.
report October 12, 2016
State Tax Subsidies for Private K-12 Education

This report explains the workings, and problems, with state-level tax subsidies for private K-12 education. It also discusses how the Internal Revenue Service (IRS) has exacerbated some of these problems by allowing taxpayers to claim federal charitable deductions even on private school contributions that were not truly charitable in nature. Finally, an appendix to this report provides additional detail on the specific K-12 private school tax subsidies made available by each state.
brief September 14, 2016
Options for a Less Regressive Sales Tax

Sales taxes are one of the most important revenue sources for state and local governments; however, they are also among the most unfair taxes, falling more heavily on low- and middle-income households. Therefore, it is important that policymakers nationwide find ways to make sales taxes more equitable while preserving this important source of funding for public services. This policy brief discusses two approaches to a less regressive sales tax: broad-based exemptions and targeted sales tax credits.
report August 8, 2016
Achieving Sustainable Infrastructure Revenue with Gas Tax Reform

This brief outlines the causes of Louisiana’s infrastructure revenue shortfall and offers recommendations for how the state can achieve “sufficient increased levels of recurring funding to address the transportation backlog in highway and bridge maintenance needs in Louisiana,” as per the Task Force’s mandate.
brief July 27, 2016
Why Sales Taxes Should Apply to Services

Read this Policy Brief in PDF here. General sales taxes are an important revenue source for state governments, accounting for close to one-third of state tax collections nationwide. But most…
report July 12, 2016
Income Tax Offers Alaska a Brighter Fiscal Future

Read this report in PDF. This month, Alaska legislators regroup in yet another special session where they will consider legislation to address a yawning budget gap created by declining oil…
report June 28, 2016
How Long Has it Been Since Your State Raised Its Gas Tax?

An updated version of this report has been published with data through July 1, 2017. Read this Policy Brief in PDF form Many states’ transportation budgets are in disarray, in…
blog May 26, 2016
New Research Shows Millionaires Less Mobile than the Rest of Us

A new study released today provides the best evidence yet that progressive state income taxes are not leading to any meaningful amount of “tax flight” among top earners.
report April 13, 2016
Distributional Analyses of Revenue Options for Alaska

Alaskans are faced with a stark fiscal reality. Following the discovery of oil in the 1960s and 1970s, state lawmakers repealed their personal income tax and began funding government primarily through oil tax and royalty revenues. For decades, oil revenues filled roughly 90 percent of the state’s general fund.
report March 22, 2016
Higher Education Income Tax Deductions and Credits in the States

Read full report in PDF Download detailed appendix with state-by-state information on deductions and credits (Excel) Every state levying a personal income tax offers at least one deduction or credit…
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.
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.
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.
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.
brief June 24, 2015
Pay-Per-Mile Tax is Only a Partial Fix

Read this report in PDF form Introduction For years, academics and transportation experts have been discussing the possibility of taxing drivers for each mile they travel on the nation’s roads. …
report June 17, 2015
Testimony: Adding Sustainability to the Highway Trust Fund

The federal Highway Trust Fund (HTF) is the single most important mechanism for funding maintenance and improvements to the nation’s transportation infrastructure. Absent Congressional action, however, the HTF will face insolvency at the end of July. Unfortunately, despite the critical importance of infrastructure to the U.S. economy, the condition of the HTF has been allowed to deteriorate to the point that imminent insolvency has become entirely normal.
report May 6, 2015
Issues with Taxing Marijuana at the State Level

Read as a PDF. Table of Contents Introduction Why Tax Marijuana? Designing a State Tax on Marijuana How Much Revenue Would Marijuana Legalization Generate for States Factors that Could Negatively…
report February 10, 2015
How Long Has it Been Since Your State Raised Its Gas Tax?

An updated version of this report has been published with data through July 1, 2017. Read the report in PDF form. Many states’ transportation budgets are in disarray, in part…
report February 5, 2015
Grocery Tax Exemption Is No Improvement for Idaho

Read as a PDF. A proposal to eliminate Idaho’s Grocery Credit Refund and create a sales tax exemption for all grocery purchases would reduce state revenues by roughly $34 million…