Lawmakers in Bismarck were treated last weekend to the largest single day of snowfall the city has ever seen. As state senators begin weighing a bill recently passed by the House that would replace the state’s income taxes with oil revenue, they might want to reflect on how similar oil revenue is to the snow: although both are in extreme abundance right now, both are volatile and unpredictable and will melt away sooner than later. Lawmakers should also consider how eliminating the state’s income taxes might warm the hearts of wealthier North Dakotans but would leave most North Dakota families out in the cold.
Dylan Grundman O'Neill
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blog March 11, 2019 North Dakota Senate Should Put the Freeze on House Tax-Cut Plan
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blog February 7, 2019 Trends We’re Watching in 2019: Addressing Lingering Federal Conformity Questions and Opportunities
In our last update on state responses to the federal tax cut (Tax Cuts and Jobs Act, or TCJA), we noted that several states were waiting until 2019 to make their final decisions, giving them additional time to (hopefully) respond in ways that improve their fiscal situations and upside-down tax codes. The TCJA is affecting the 2018 federal taxes people are filing now, in some cases adding urgency and/or confusion to these debates.
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blog January 30, 2019 Data for the Win: Advocating for Equitable State and Local Tax Policy (Webinar)
Watch the video recording below for discussion on how ITEP’s distributional data can be part of an advocacy and communications strategy for securing state tax policies that raise enough revenue to fund various priorities. Outline includes a brief overview of findings from the sixth edition of Who Pays? A Distributional Analysis of the Tax Systems in All 50 States as well as insight from state advocates who use Who Pays? and other tax policy analyses research to pursue their legislative agendas.
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report January 9, 2019 Moving Toward More Equitable State Tax Systems
New and returning policymakers have a tremendous opportunity to improve their constituents’ lives and their states’ economies through tax policy. This report distills the findings of “Who Pays?” into policy recommendations that can serve as a guide to new lawmakers, advocates, and others seeking to improve their state’s tax codes. It explains the importance of favoring taxes on income and wealth over taxes on consumption, the value of certain targeted tax benefits for families living in poverty, the need to abandon ineffective, unnecessary tax subsidies for high-income households, and the promise of bold new options for improving the regressive distributional outcomes of state and local tax policies.
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blog January 9, 2019 A New Quick-Start Guide to “Who Pays?”
For those looking to start improving on these inequitable tax systems today, we now also offer a helpful companion to “Who Pays?” called “Moving Toward More Equitable State Tax Systems.” This new report distills the findings of “Who Pays?” into a set of policy recommendations – from the foundational to the aspirational – that residents of every state can draw from and start work on now.
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media mention January 3, 2019 The Progressive: States and Localities Move to Reverse Racist and Regressive Tax Policies
And a recent analysis of state and local tax systems by the Institute on Taxation and Economic Policy shows that, as a whole, state and local governments tax the poor… -
media mention November 14, 2018 Real News Network: Even for Local Taxes, the Rich Pay Far Less Than the Poor
Dylan Grundman, an ITEP senior policy analyst, discusses Who Pays. -
media mention August 9, 2018 CNBC: Tax Holidays May Not Be the Bargain You Think They Are
Everyone loves a bargain. Except when the bargain doesn’t really save you money. It may feel great not to pay tax for back-to-school clothes and backpacks, but the Institute on… -
blog July 12, 2018 18 States Will Take Holidays from Sound Tax Policy This Year
State sales tax holidays, our newly updated policy brief shows, are the equivalent of the bad kind of holiday vacation: tax policy that sounds nice at first but ultimately cuts corners, wastes money, precludes better options, and leaves states worse off than they would be without them. Unfortunately, while several states have wised up about sales tax holidays in recent years, 18 states will fall for the superficial attraction of these tax policy gimmicks in 2018.
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brief July 12, 2018 Sales Tax Holidays: An Ineffective Alternative to Real Sales Tax Reform
An updated version of this brief for 2019 is available here. Read this report in PDF. Overview Sales taxes are an important revenue source, composing close to half of all… -
blog July 3, 2018 An Update on State Responses to the Federal Tax Bill
With many state fiscal years beginning July 1, most states that will make decisions this year about federal tax conformity have now done so, so it is now time for an update on how well state policymakers have kept to, or veered from, the path we charted out earlier this year. Most states that have enacted laws in response to the federal changes have adhered to some but not all of the principles we laid out, with a few responding rather prudently and a handful charting a much more treacherous course of unfair, unsustainable policy based on unfounded promises of economic growth.
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blog June 22, 2018 What’s at Stake in South Carolina’s Upcoming Tax Conformity Debate
South Carolina legislators will return next week to try to finalize a few issues before the end of their session and fiscal year on June 30th, including the question of how to respond to the federal Tax Cuts and Jobs Act (TCJA). That’s a short timeframe with some important questions at stake, and some misinformation has been spread, so here’s a quick guide to the facts, issues, and options.
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blog March 5, 2018 Trends We’re Watching in 2018, Part 1: State Responses to Federal Tax Cut Bill
Over the next few weeks we will be blogging about what we’re watching in state tax policy during 2018 legislative sessions. And there is no trend more pervasive in states this year than the need to sort through and react to the state-level impact of federal tax changes enacted late last year.
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blog July 21, 2017 States May Be Finally Learning Their Lesson on Back-To-School Sales Tax Holidays
State lawmakers face a dilemma when it comes to sales tax holidays, an attractive and popular policy that nonetheless proves to be a poor choice compared to developing thoughtful, targeted tax policies or investing in well-executed public services. Luckily, word seems to be getting out that the costs associated with these holidays far outweigh their purported benefits.
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blog May 12, 2017 South Carolina’s Gas Tax Deal: Could Have Been Worse, Could Have Been Better
South Carolina lawmakers this week raised the state’s gas tax for the first time in 28 years, a time period that tied for the third-longest in the nation. While the… -
blog May 4, 2017 Nebraska Vote Is Latest Defeat for Tax-Cut “Trigger” Gimmick
Nebraska lawmakers had a long and contentious tax-cut debate this session but ultimately chose the wise path and rejected attempts to give a massive tax cut to the wealthy at… -
blog May 1, 2017 Time to Repeal State Deductions for Federal Income Taxes
Three of the biggest needs facing state policymakers right now are new revenues to fund their priorities in the face of budget shortfalls and federal funding cuts, ways to insulate… -
brief May 1, 2017 Why States That Offer the Deduction for Federal Income Taxes Paid Get It Wrong
With many states currently facing budget shortfalls—whether due to weak economic recovery after the Great Recession, struggling commodity prices, or self-inflicted tax cuts—and all states bracing for possible federal budget cuts in areas from education to health care to infrastructure, states are unlikely to be able to continue providing high-quality services to their residents without raising new revenue. In this context, states must find ways to generate additional revenue without increasing taxes on individuals and families who are already struggling to make ends meet and may bear the biggest brunt of federal funding cuts.
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blog March 31, 2017 All Is Peachy in Georgia, for Now
Georgia lawmakers ended their legislative session Thursday by enacting a few tax credits and smartly choosing not to pass a major income tax cut that had been working its way… -
blog February 28, 2017 What to Watch in the States: State-Federal Relationship Shifting
So far in this series on tax policy topics to watch in 2017, we’ve covered important state debates in areas such as attempts to weaken or eliminate progressive taxes and… -
blog February 27, 2017 States Should Require Combined Reporting of Corporate Income
An important aspect of a 21st century tax code is ensuring that corporate income taxes are easy for corporations to follow, but not easy for them to avoid. As our… -
brief February 24, 2017 Combined Reporting of State Corporate Income Taxes: A Primer
Over the past several decades, state corporate income taxes have declined markedly. One of the factors contributing to this decline has been aggressive tax avoidance on the part of large, multi-state corporations, costing states billions of dollars. The most effective approach to combating corporate tax avoidance is combined reporting, a method of taxation currently employed in more than half of the states that tax corporate income. The two most recent states to enact combined reporting are Rhode Island in 2014 and Connecticut in 2015.
In several states, including Connecticut, Illinois, Massachusetts, Rhode Island, and Vermont, lawmakers adopted the policy after first carrying out in-depth studies of its potential effects. This policy brief explains how combined reporting works.
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blog February 13, 2017 ‘IMPROVE’ Act Fails to Improve Tennessee’s Regressive Tax Code
Tennessee Gov. Bill Haslam’s proposal (dubbed the IMPROVE Act) to raise the state’s gas tax while cutting three other taxes would essentially be a tax cut for the state’s wealthiest… -
brief December 21, 2016 State Estate and Inheritance Taxes
For much of the last century, estate and inheritance taxes have played an important role in fostering strong communities by promoting equality of opportunity and helping states adequately fund public services. While many of the taxes levied by state and local governments fall most heavily on low-income families, only the very wealthy pay estate and inheritance taxes.
Changes in the federal estate tax in recent years, however, caused states to reevaluate the structure of their estate and inheritance taxes. Unfortunately, the trend of late among states has tended toward weakening or completely eliminating them. But this need not be so; states can restore or improve their estate and inheritance taxes as a vital progressive revenue source to support services and communities while also protecting the source from the whims of federal lawmakers. This policy brief explains state inheritance and estate taxes, discusses recent state trends and policy decisions that have impacted the taxes, and explores how states can adopt or strengthen these important components of a progressive tax structure.
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media mention December 2, 2016 Bloomberg BNA: For Better or for Worse? Tax Policy Changes in New Jersey
“But gas taxes are also highly regressive, falling most heavily on low- and middle-income families. In this case, an analysis using the Institute on Taxation and Economic Policy microsimulation model…