Personal Income Taxes
Who Pays? Fifth Edition
January 10, 2015 • By ITEP Staff
Read the Report in PDF The 2015 Who Pays: A Distributional Analysis of the Tax Systems in All Fifty States (the fifth edition of the report) assesses the fairness of state and local tax systems by measuring the state and local taxes that will be paid in 2015 by different income groups as a share […]
Tennessee Hall Tax Repeal Would Overwhelmingly Benefit the Wealthy, Raise Tennesseans’ Federal Tax Bills by $60 Million
March 24, 2014 • By Carl Davis
A new analysis performed using the ITEP Microsimulation Tax Model shows that the vast majority of Tennesseans would see very little benefit from Hall Tax repeal. Nearly two-thirds (63 percent) of the tax cuts would flow to the wealthiest 5 percent of Tennessee taxpayers, while another quarter (23 percent) would actually end up in the federal government's coffers. Moreover, if localities respond to Hall Tax repeal by raising property taxes, some Tennesseans could actually face higher tax bills under this proposal.
More Inaccuracies, Bigger Omissions: Arthur Laffer’s Newest Study of Income Tax Repeal Falls Short
January 23, 2013 • By Carl Davis
Arthur Laffer's consulting firm--Arduin, Laffer & Moore Econometrics (ALME)--has released a report purporting to show that North Carolina could usher in an economic boom if it repeals its personal and corporate income taxes and replaces them primarily with a much larger sales tax. Prepared for the Civitas Institute, "More Jobs, Bigger Paychecks" relies on an economic analysis that is fundamentally flawed to the point of making it entirely useless.
Proposal to Eliminate Income Taxes Amounts to a Tax Increase on Bottom 80 Percent of Louisianans
January 11, 2013 • By Meg Wiehe
Louisiana Governor Bobby Jindal has said that he supports the elimination of the state's personal and corporate income taxes. In fiscal year 2012, Louisiana collected nearly $3 billion in revenues from its personal and corporate income taxes.
State Tax Codes As Poverty Fighting Tools
September 13, 2012 • By Meg Wiehe
The tax systems of virtually every state are pushing poor families deeper into poverty. But state tax systems also have the potential to play a role in fighting poverty. The four low-income tax credits discussed in this report are among the most cost-effective anti-poverty strategies available to lawmakers: the Earned Income Tax Credit, property tax circuit breakers, targeted low-income tax credits, and child-related tax credits. This report identifies the states in which each of these credits is offered, and provides specific recommendations tailored to policymakers in each state as they work to combat poverty.
Most of Indiana Tax Rate Cut Would Flow to Upper-Income Taxpayers
August 27, 2012 • By Carl Davis
Alternative Could Provide Larger Tax Cuts for Most Hoosiers Indiana gubernatorial candidate, and current U.S. Representative, Mike Pence recently unveiled his plan to cut the state’s flat personal income tax rate from 3.4 percent to 3.06 percent, should he be elected governor. Pence described the plan as an “across the board” tax cut for “every […]
State Estate and Inheritance Taxes
August 1, 2012 • By Meg Wiehe
For much of the last century, estate and inheritance taxes have played an important role in helping states to adequately fund public services in a way that exempts middle- and low income taxpayers.
The Progressive Income Tax: An Essential Element of Fair and Sustainable State Tax Systems
July 1, 2012 • By Meg Wiehe
A few vocal critics have pointed to state personal income taxes as the source of a variety of fiscal and economic problems- arguing that it has enabled wasteful spending, fueled the volatility of revenue collections, or even stifled job-creation. Accordingly, some of these critics have called for the outright repeal of the income tax, while others have suggested making it significantly less progressive. Such proposals, if acted upon, would make it all but impossible for state tax systems to produce revenue in a fair and sustainable fashion.
Tax Bill Signed by Governor Brownback Makes Kansas an Outlier
May 24, 2012 • By Meg Wiehe
Kansas Governor Sam Brownback recently signed into law Senate Substitute for HB 2117, a tax bill that dramatically changes the Kansas income tax structure. The legislation will cut taxes by over $760 million a year but will actually increase taxes on some lowand middle-income families. This report describes the legislation and its impact on working […]
Latest Kansas Tax Bill Carries $680 Million Price Tag and Raises Taxes on Those Least Able to Pay
May 17, 2012 • By Meg Wiehe
A joint House-Senate conference committ ee is poised to approve a revised version of the tax bill recently sent to the Governor by the House of Representatives. An Institute on Taxation and Economic Policy (ITEP) analysis of the agreed-upon tax bill shows that it would reduce state tax collections by about $680 million a year, […]
Three Strategies for Making Enacted Kansas Tax Plan Less Unfair and Less Costly
May 10, 2012 • By Meg Wiehe
Yesterday, the Kansas House of Representatives passed, and sent to Governor Sam Brownback, a tax plan, Senate Substitute for House Bill 2117, that had been previously ratified by the state Senate. A number of lawmakers in both houses have expressed dismay at the projected long-term cost of the bill, and the governor has indicated that […]
Kansas Tax Bill Would Cost $600 Million a Year While Hiking Taxes on Low-Income Families
May 8, 2012 • By Meg Wiehe
Kansas legislators are set to vote on a tax bill recently approved by a joint House-Senate conference committee. An ITEP analysis of the agreed-upon tax bill shows that it would reduce state tax collections by close to $600 million a year, while actually increasing taxes on many low- and middle-income Kansans. The conference committee plan […]
Regarding Proposals to Increase Taxes on Upper-Income Rhode Islanders
April 24, 2012 • By Meg Wiehe
My testimony focuses in general on the slate of bills in front of the committee today that would raise taxes on wealthy Rhode Islanders. These bills present Rhode Island policymakers sensible revenue-raising options that could be used to either prevent deeper spending cuts or restore spending to vital public investments such as education, health care, […]
Tax Plans Put Kansas on Road Away from Fair & Adequate Tax Reform
March 30, 2012 • By Meg Wiehe
Both the House and Senate have recently passed bills, loosely modeled on the Governor’s plan, that would reduce income tax rates, but their plans are different in very important ways. This ITEP report assesses the impact of the House and Senate plans on state revenues and tax fairness, and finds that each of these plans […]
Idaho House Tax Plan Stacked In Favor of the Wealthy
March 24, 2012 • By Carl Davis
Most Tax Cuts Flow to the Top 1%, Vast Majority of Idahoans Receive No Benefit An income tax cut recently passed by the Idaho House of Representatives, and backed by Governor Butch Otter, would reduce state revenues by over $35 million a year while benefitting only a small fraction of the wealthiest Idahoans. Four out […]
Testimony on Reinstating Maryland’s “Millionaires’ Tax”
February 29, 2012 • By Carl Davis
SB 249 would permanently reinstate the “millionaires’ tax” that expired at the end of 2010. This testimony emphasizes that the “millionaires’ tax” makes Maryland’s tax system at least somewhat less unfair than it otherwise would be; that reinstating the tax would result in a substantial federal tax cut for upper-income Marylanders; and that claims about […]
Arthur Laffer Regression Analysis is Fundamentally Flawed, Offers No Support for Economic Growth Claims
February 15, 2012 • By Carl Davis
A November 2011 report from the Oklahoma Council for Public Affairs (OCPA) in partnership with Arduin, Laffer & Moore, a consulting group headed by Arthur Laffer, explains the method that Laffer has been using to make the case that tax cuts lead to economic growth. The results he offers appear impressive, but his methods are […]
“High Rate” Income Tax States Are Outperforming No-Tax States
February 8, 2012 • By Carl Davis
Don’t Be Fooled by Junk Economics With the economy lagging, lawmakers seeking to reduce or eliminate state personal income taxes are touting their proposals as tools for boosting economic growth. Of particular note are the governors of Kansas and Oklahoma, both of whom justified income tax repeal in their State of the State speeches by […]
Kansas Governor Tax Proposal: Wealthy Kansans Pay Less, Poor and Middle-Income Kansans Pay More
January 11, 2012 • By Meg Wiehe
Kansas Governor Sam Brownback unveiled his long anticipated tax plan last week. Sweeping changes to reduce the state’s reliance on its progressive personal income tax are at the core of the proposal. The plan cuts income tax rates, eliminates a variety of income tax deductions and credits, and makes permanent a temporary sales tax rate […]
Costs of Personal Income Tax Repeal in Kansas
October 4, 2011 • By Meg Wiehe
Given the challenging fiscal climate facing Kansas, the proposed income tax plan should be thought of not simply as a tax cut but as a tax swap. News reports confirm our expectation that revenues from income taxes would be at least partially replaced by sales and property taxes under the Governor’s plan. The graphic below […]
State Tax Codes As Poverty Fighting Tools (2011)
September 22, 2011 • By Meg Wiehe
This report presents a comprehensive view of anti-poverty tax policy decisions made in the states in 2011 and offers recommendations every state should consider to help families rise out of poverty. States can jump-start their anti-poverty efforts by enacting one or more of four proven and effective tax reforms: refundable state Earned Income Tax Credits, […]
Rewarding Work Through Earned Income Tax Credits
September 1, 2011 • By Meg Wiehe
Low-wage workers often face a dual challenge as they struggle to make ends meet. In many instances, the wages they earn are insufficient to encourage additional hours of work or long-term attachment to the labor force. At the same time, most state and local tax systems impose greater responsibilities on poor families than on wealthy ones, making it even harder for low-wage workers to move above the poverty line and achieve meaningful economic security. The Earned Income Tax Credit (EITC) is designed to help low-wage workers meet both those challenges. This policy brief explains how the credit works at the…
State Income Taxes and Older Adults
September 1, 2011 • By Meg Wiehe
State governments provide a wide array of tax breaks for their elderly residents. Almost every state levying an income tax now sensibly allows some form of income tax exemption or credit for its over-65 citizens that is unavailable to non-elderly taxpayers. But many states have enacted poorly-targeted, unnecessarily expensive elderly income tax breaks that make state tax systems less sustainable and less fair. This policy brief surveys approaches to elderly income tax relief and suggests options for reforming state tax breaks for seniors.
State Treatment of Itemized Deductions
September 1, 2011 • By Meg Wiehe
In 2011, thirty one states and the District of Columbia allow a group of income tax breaks known as "itemized deductions." Itemized deductions are designed to help defray a wide variety of personal expenditures that affect a taxpayer's ability to pay taxes, including charitable contributions, extraordinary medical expenses, mortgage interest payments and state and local taxes. But, these deductions cost states billions of dollars a year while providing little or no benefit to the middle- and low-income families hit hardest by the current economic downturn. This policy brief explains itemized deductions and explores options for reforming these upside down tax…
The Folly of State Capital Gains Tax Cuts
September 1, 2011 • By Meg Wiehe
For over twenty years now, the federal tax system has treated income from capital gains more favorably than income from work. A significant number of state tax systems do as well, offering tax breaks for profits realized from local investments and, in some instances, from investments around the world. As states struggle to cope with short- and long-term budget deficits and to devise strategies to promote economic development in a sustainable fashion, policymakers should assess whether preserving such tax preferences is in the public interest. This policy brief explains state capital gain taxation and examines the flaws in state capital…
The personal income tax is typically the fairest revenue source relied on by federal and state governments. A properly structured personal income tax could offer an important boost in progressivity to what are otherwise overwhelmingly regressive state tax structures.
Forty-one states and the District of Columbia levy broad-based personal income taxes. ITEP’s personal income tax resources provide both general and state-specific information about the impact as well as the mechanics and merits of personal income taxes.
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