Reports

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.

With the state’s gas tax pegged to the price of gasoline, North Carolina is scheduled to raise its gas tax rate on July 1. This increase was entirely predictable, but is understandably controversial. Unfortunately, the debate surrounding what to do in the wake of this increase has been far too narrow, focusing on just two […]

How much is enough? On top of the close to $500 million in corporate tax breaks Illinois doles out each year, Governor Pat Quinn now finds himself confronted by a growing crowd of CEO’s demanding even more. In the wake of tax-break lobbying efforts by Motorola, Sears and Caterpillar, the latest corporation seeking preferential tax […]

My testimony today examines the erosion of Rhode Island’s corporate income tax, and the multistate tax avoidance schemes that have contributed to this erosion. In addition, it discusses the single best strategy available to lawmakers seeking to respond to the problem of corporate tax avoidance—mandatory combined reporting. Requiring combined reporting of the income of multistate […]

My testimony today focuses on House Bill 5737, which would enact a variety of reforms designed to enhance the level of scrutiny applied to new tax credits, deductions, exemptions, and exclusions. This testimony emphasizes how these reforms would help remove counterproductive biases in favor of relying too heavily on tax preferences; how similar reforms have […]

Five months into 2011, a glimmer of hope for progressive tax policy and a balanced, sensible approach to state budget woes has emerged in Connecticut. Lawmakers in all but a handful of states are continuing to grapple with historic budget shortfalls as they craft and finalize their budget plans for next year. State revenues continue […]

In just the last few weeks, Arkansas and Illinois joined New York, North Carolina, and Rhode Island in enacting legislation requiring some online retailers, like Amazon.com, to collect sales taxes on purchases made by their state’s residents. Vermont’s House of Representatives recently passed similar legislation, and Arizona, California, Connecticut, Hawaii, Massachusetts, Minnesota, Mississippi, Missouri, New […]

My testimony focuses on Governor Chafee’s Sales Tax Modernization Proposal, which would generally broaden Rhode Island’s sales tax base, lower the general state sales tax rate, and raise additional revenue to help mitigate budget cuts. In particular, my testimony will provide thoughts on two components of the governor’s proposal: adding a mix of services to […]

In 2011, thirty one states and the District of Columbia allow a group of income tax breaks known as “itemized deductions” (Figure 1). 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 […]

The precipitous drop in state tax collections during the recent recession has prompted some observers to argue that relying on volatile state taxes is a recipe for budgetary disaster. The most recent version of this argument, made by the Wall Street Journal’s Robert Frank, suggests that the personal income tax in particular is highly volatile, […]

Earlier this month, Illinois Senate President John Cullerton suggested that limiting the state’s generous income tax break for retirement income “would just be a matter of fairness.” Senator Cullerton’s suggestion gives Illinois policymakers a welcome opportunity to reflect on the appropriate design of senior-citizen income tax relief in Illinois. This paper summarizes the mechanisms used […]

My testimony focuses on House Bill 581, which would create a Missouri Earned Income Tax Credit (EITC). In particular, my testimony will discuss the impact of this bill on the overall fairness of Missouri’s tax system. Read the Full Report (PDF)

The budget outlook for state governments is bleak. Despite evidence that revenues are rebounding, there is a general acknowledgement that ?broad fiscal conditions remain fragile. The need for public investments—particularly health care for low-wage or unemployed workers and their families—is greater than ever. An increasing number of states are struggling to keep their fiscal year […]

In 2008, Maryland enacted a temporary change to its income tax in order to compensate for revenue lost from repealing a law subjecting computer services to the state’s sales tax. The income tax change in question, which expired at the end of 2010, created a new top income tax bracket with a rate of 6.25 […]

The ITEP Guide to Fair State and Local Taxes, released in March of 2011, offers citizens, activists, journalists, and policymakers a detailed primer on state and local tax policy. The guide explains the differences between progressive, flat, and regressive taxes — and why you should care. It covers the full range of taxes that states […]

The budget outlook for the states is improving, but uncertain. In this context, states must find ways to generate additional revenue that create neither additional responsibilities for individuals and families struggling to make ends meet nor additional distortions in the economy as a whole. For eight states – Arkansas, Hawaii, Montana, New Mexico, North Dakota, […]

The Wall Street Journal recently published an editorial suggesting that a 2 percentage point increase in Oregon’s top income tax rate caused up to 10,000 wealthy Oregonians to flee the  state. In support of its claim, the Journal points to new data showing that 10,000 fewer Oregonians were affected by this tax increase than the […]

Less than one month from now, federal tax cuts pushed through by President George W. Bush are scheduled to expire—and Congressional tax writers have spent much of this year debating how these tax cuts should be extended. This debate has huge implications for the nation’s fiscal health, but also has often-overlooked implications for state revenues. […]

Compared to previous years, the budget outlook for the states improved only slightly in 2010 and virtually every state continued to face a budget shortfall. As a result, the overwhelming majority of state policymakers were put in the unenviable position of having to address some very difficult budgetary issues. Lawmakers were forced to make the […]

I’m here to talk about combined reporting, which ITEP views as a vital step towards ensuring the vitality of the Maryland corporate income tax going forward.  I’d like to use my allotted time to discuss one important policy choice that Maryland policymakers must make in implementing combined reporting. Read the Full Report (PDF)  

Recently released data from the Census Bureau confirms that overall Washington could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Washington as a low tax state — instead, they pay more than their fair share of state and local taxes.. Read the Full Report […]

Recently released data from the Census Bureau confirms that overall Texas could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Texas as a low tax state — instead, they pay more than their fair share of state and local taxes. Read the Full Report […]

Recently released data from the Census Bureau confirms that overall, Tennessee could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Tennessee as a low tax state — instead, they pay more than their fair share of state and local taxes. Read the Full Report […]

Recently released data from the Census Bureau confirms that overall, Florida could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Florida as a low tax state — instead, they pay more than their fair share of state and local taxes. Read the Full Report […]

Recently released data from the Census Bureau confirms that overall, Arkansas could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Arkansas as a low tax state — instead, they pay more than their fair share of state and local taxes. Read the Full Report […]