Indiana

Gas tax revenues are on an unsustainable course. Over the last five years, Congress has transferred more than $53 billion from the general fund to the transportation fund in order to compensate for lagging gas tax revenues. By 2015, the transportation fund will be insolvent unless an additional $15 billion transfer is made. Larger transfers will be needed in subsequent years.

Indiana Governor Mike Pence and the state's legislative leaders recently announced a budget agreement that, among other things, phases the state's flat personal income tax rate down from 3.4 percent to 3.23 percent by 2017.

The Indiana Senate Appropriations Committee recently approved a budget cutting the state's personal income tax rate from 3.4 percent to 3.3 percent beginning in 2015. Although this proposal costs less than one-third the amount of Governor Pence's preferred cut (which would take the rate down to 3.06 percent), it would still reduce state revenues by roughly $150 million each year.

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.

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.