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As the nation's governors gather in Williamsburg, Virginia this week, their focus is on their Chairman's initiative, Growing State Economies. Too often, however, a governor's knee-jerk response to a lagging economy is to start cutting taxes, even though state tax cuts offer a demonstrably low economic bang-for-the-buck, for a number of reasons.
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.
Sales taxes are among the most important--and most unfair--taxes levied by state governments. Sales taxes accounted for a third of state taxes in 2011, but sales taxes are regressive, falling far more heavily on low- and middle- income taxpayers than on the wealthy. In recent years, lawmakers thinking they might lessen the impact of these taxes have enacted "sales tax holidays" that provide temporary sales tax breaks for purchases of clothing, computers, and other items. This policy brief looks at sales tax holidays as a tax reduction device.
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 […]
How Federal Tax Reform Can Help or Hurt State and Local Governments
April 25, 2012 • By Matthew Gardner
Federal tax reform can affect state and local taxes in several ways. The federal government can create, repeal or change tax expenditures in a way that is passed on to the states because virtually every state has tax rules linked to the federal rules. The federal government can subsidize state and local governments’ ability to […]
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, […]
Since Tennessee Governor Bill Haslam proposed reducing the state’s estate tax in February, Tennessee lawmakers have shown increasing interest in this idea. Recently, a House subcommittee one-upped the governor by approving a bill that would gradually repeal the tax outright. House Speaker Beth Harwell explained this move by noting that “[w]e know this tax drives […]
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 […]
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 […]
Alaska Senate State Affairs Committee Regarding SB 29, The Alaska Tax Break Transparency Act
March 6, 2012 • By Carl Davis
My testimony today deals with Senate Bill 29, which would take an important first step toward achieving these goals by requiring regular scrutiny of Alaska “tax expenditures”—that is, the various tax credits, deductions, exemptions, and other breaks that reduce Alaska tax revenue. The basic insight behind the idea of “tax expenditures” is that a law […]
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 […]
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