Recent Work
2085 items
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.
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.
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.
Michigan’s “Customer” Service Fail Is a Cautionary Tale about Cutting Taxes and Disinvestment
January 28, 2016 • By Jenice Robinson
The Michigan legislature just approved a $28 million appropriation to provide immediate aid in response to the water crisis in Flint, Mich., where vulnerable children and families have been poisoned by toxic lead. This avoidable crisis partly has roots in the misguided movement to cut taxes so much that state and local governments have difficulty […]
Testimony before the Vermont Senate Committee on Finance: Tax Policy Issues with Legalized Retail Marijuana
January 19, 2016 • By Carl Davis
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…
ITEP Comments to the Vermont Senate Committee on Finance: Tax Expenditure Evaluation
January 13, 2016 • By Carl Davis
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…
When thinking of tax havens, one generally pictures notorious zero-tax Caribbean islands like the Cayman Islands and Bermuda. However, we can also find a tax haven a lot closer to home in the state of Delaware - a choice location for U.S. business formation. A loophole in Delaware's tax code is responsible for the loss of billions of dollars in revenue in other U.S. states, and its lack of incorporation transparency makes it a magnet for people looking to create anonymous shell companies, which individuals and corporations can use to evade an inestimable amount in federal and foreign taxes. The…
Read the Report in PDF Form An individual savings account can serve as an emergency reserve – a financial cushion to sustain yourself in the event of an emergency. “Rainy day” funds are much like individual saving accounts, but on a statewide scale. Lawmakers use rainy day funds to set aside state tax revenue during […]
The U.S. Census Bureau released data in September showing that the share of Americans living in poverty remains high. In 2014, the national poverty rate was 14.8 percent - statistically unchanged from the previous year. However, the poverty rate remains 2.3 percentage points higher than it was in 2007, before the Great Recession, indicating that recent economic gains have not yet reached all households and that there is much room for improvement. The 2014 measure translates to more than 46.7 million - more than 1 in 7 - Americans living in poverty. Most state poverty rates also held steady between…
Rewarding Work Through State Earned Income Tax Credits
September 17, 2015 • By Aidan Davis, Lisa Christensen Gee, Meg Wiehe
Despite some economic gains in recent years, the number of Americans living in poverty has held steady over the past four years. At the same time, wages for working families have remained stagnant and more than half of the jobs created by the economic recovery since 2010 were low-paying, mostly in the food services, retail, and employment services industries. Our country's growing class of low-wage workers often faces a dual challenge as they struggle to make ends meet. First, wages are too low and growing too slowly - despite recent productivity gains - to keep up with the rising cost…
Low Tax for Whom?: Tennessee is a “Low Tax State” Overall, But Not for Families Living in Poverty
September 17, 2015 • By Meg Wiehe
Annual data from the U.S. Census Bureau appear to lend support to Tennessee's reputation as a "low tax state," ranking it 50th nationally in taxes collected as a share of personal income.1 But focusing on the state's overall tax revenues has led many observers to overlook the fact that different taxpayers experience Tennessee's tax system very differently. In particular, the poorest 20 percent of Tennessee residents pay significantly more of their income (10.9 percent) in state and local taxes than any other group in the state. For low-income families, Tennessee is far from being a low tax state.2 In fact,…
Low Tax for Whom?: South Dakota is a “Low Tax State” Overall, But Not for Families Living in Poverty
September 17, 2015 • By Meg Wiehe
Annual data from the U.S. Census Bureau appear to lend support to South Dakota's reputation as a "low tax state," ranking it 51st nationally in taxes collected as a share of personal income, the lowest overall tax state.1 But focusing on the state's overall tax revenues has led many observers to overlook the fact that different taxpayers experience South Dakota's tax system very differently. In particular, the poorest 20 percent of South Dakota residents pay significantly more of their income (11.3 percent) in state and local taxes than any other group in the state. For low-income families, South Dakota is…
Low Tax for Whom?: Washington is a “Low Tax State” Overall, But Not for Families Living in Poverty
September 17, 2015 • By Meg Wiehe
Annual data from the U.S. Census Bureau appear to lend support to Washington's reputation as a "low tax state," ranking it 36th nationally in taxes collected as a share of personal income.1 But focusing on the state's overall tax revenues has led many observers to overlook the fact that different taxpayers experience Washington's tax system very differently. In particular, the poorest 20 percent of Washington residents pay significantly more of their income (16.8 percent) in state and local taxes than any other group in the state. For low-income families, Washington is far from being a low tax state.2 In fact,…
Low Tax for Whom?: Florida is a “Low Tax State” Overall, But Not for Families Living in Poverty
September 17, 2015 • By Meg Wiehe
Annual data from the U.S. Census Bureau appear to lend support to Florida's reputation as a "low tax state," ranking it 48th nationally in taxes collected as a share of personal income.1 But focusing on the state's overall tax revenues has led many observers to overlook the fact that different taxpayers experience Florida's tax system very differently. In particular, the poorest 20 percent of Florida residents pay significantly more of their income (12.9 percent) in state and local taxes than any other group in the state. For low-income families, Florida is far from being a low tax state.2 In fact,…
Low Tax for Whom?: Texas is a “Low Tax State” Overall, But Not for Families Living in Poverty
September 17, 2015 • By Meg Wiehe
Annual data from the U.S. Census Bureau appear to lend support to Texas' reputation as a "low tax state," ranking it 39th nationally in taxes collected as a share of personal income.1 But focusing on the state's overall tax revenues has led many observers to overlook the fact that different taxpayers experience Texas' tax system very differently. In particular, the poorest 20 percent of Texans pay significantly more of their income (12.5 percent) in state and local taxes than any other group in the state. 2 For low-income families, Texas is far from being a low tax state. In fact,…
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