Recent Work

Kansas House and Senate Proposals Set the Stage for Tax Hikes on Poor and Middle-Income Families

April 2, 2013 • By Meg Wiehe

Earlier this year, Kansas Governor Sam Brownback proposed another round of personal income tax cuts (on top of those he signed into law last year).1 The House and Senate each responded with their own tax cut plans and are expected to reconcile their differences this week. To date, much attention has been given to the major difference between the House and Senate plans -- the Senate bill includes permanently preserving a sales tax rate hike that was set to expire this summer while the House plan would allow the rate hike to expire. However, the long term impact of either…

Governor Jindal’s Tax Plan Would Increase Taxes on Poorest 60 Percent of Louisianans

April 1, 2013 • By Meg Wiehe

In recent weeks, Louisiana Governor Bobby Jindal has released many details of the tax plan he first sketched out in January. The Governor proposes a revenue-neutral "tax swap" that would repeal all state income taxes and increase the state's sales tax among other changes. A new ITEP analysis of the Governor's plan shows that, if fully implemented in 2013, the plan would increase taxes on the poorest sixty percent of Louisianans overall, while providing large tax cuts for the best-off Louisiana taxpayers.

States with “High Rate” Income Taxes are Still Outperforming No-Tax States

February 28, 2013 • By Carl Davis

Lawmakers in about a dozen states are giving serious consideration to either cutting or eliminating their state personal income taxes. In each case, these proposals are being touted as a way to boost economic growth.

Laffer’s New Job Growth Factoid is All Rhetoric and No Substance

February 27, 2013 • By Carl Davis

A new talking point printed on the opinion page of The Wall Street Journal is proving irresistible to state lawmakers looking for an excuse to reduce or eliminate their states' income taxes: A new analysis by economist Art Laffer for the American Legislative Exchange Council finds that, from 2002 to 2012, 62% of the three million net new jobs in America were created in the nine states without an income tax, though these states account for only about 20% of the national population.

IDACorp– Biggest Winner Under Property Tax Plan– Pays Nothing in State Income Taxes

February 13, 2013 • By Carl Davis

Idaho Governor Butch Otter and the state legislature are seriously considering repealing the personal property tax on business equipment. The governor claims that repealing the tax would help the state's economy, but says that he is "painfully aware" that repeal would dramatically cut into the revenues that many local governments depend on to provide public services. 1 The tax generates $141 million in revenue every year for cities, counties, and public schools. As a result, the Governor says that he "can't predict" whether lawmakers will be able to reach agreement on repealing the tax.

Kansas Governor’s New Plan Increases Taxes on Poor Yet Slashes Revenue by $340 Million

February 1, 2013 • By Meg Wiehe

Kansas Governor Sam Brownback proposed, for the second straight year, major tax changes during his State of the State speech. These new changes include lowering the tax rates to 1.9 and 3.5 percent, eliminating itemized deductions for mortgage interest and property taxes paid, and raising the sales tax.

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.

Previewing Tax Reform in the States: National Trends and State-specific Prospects for 2013

December 13, 2012 • By Meg Wiehe

Following an election that left half the states with veto-proof legislative majorities, 39 states with one-party rule and more than a dozen with governors who put tax reform high on their agendas, 2013 promises to be a big year for changes to state tax laws.

Tax Principles: Building Blocks of A Sound Tax System

December 1, 2012 • By Meg Wiehe

The fundamental purpose of taxation is to raise the revenue necessary to fund public services. While there are many ways to achieve this goal, a widely agreed-upon set of principles should be used to evaluate tax systems. This policy brief provides a basic overview of five commonly cited principles of sound tax policy: equity, adequacy, simplicity, exportability, and neutrality.

Five Steps Toward a Better Tax Expenditure Debate

October 1, 2012 • By Carl Davis

Almost without exception, state lawmakers do not closely scrutinize special tax credits, exemptions, and other "tax expenditures" on a regular basis. A recent report by the Pew Center on the States found, for example, that half the states have done nothing even remotely rigorous in the last five years to determine if even a single one of their economic development tax incentives is working.

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 […]

Corporate Income Tax Apportionment and the “Single Sales Factor”

August 1, 2012 • By Meg Wiehe

One of the thorniest problems in administering state corporate income taxes is how to distribute the profits of multi-state corporations among the states in which they operate. Ultimately, each corporation's profits should be taxed in their entirety, but some corporations pay no tax at all on a portion of their profits. This problem has emerged, in part, due to recent state efforts to manipulate the "apportionment rules" that distribute such profits. This policy brief explains how apportionment rules work and assesses the effectiveness of special apportionment rules such as "single sales factor" as economic development tools.

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.