Ohio

The problem of offshore tax avoidance by American corporations could grow much worse under President Donald Trump’s proposal to adopt a “territorial” tax system, which would exempt the offshore profits of American corporations from U.S. taxes. This change would increase the already substantial benefits American corporations obtain when they use accounting gimmicks to make their profits appear to be earned in a foreign country that has no corporate income tax or has one that is extremely low or easy to avoid.

A tiny fraction of the U.S. population (one-half of one percent) earns more than $1 million annually. But in 2018 this elite group would receive 48.8 percent of the tax cuts proposed by the Trump administration. A much larger group, 44.6 percent of Americans, earn less than $45,000, but would receive just 4.4 percent of the tax cuts.

A tiny fraction of the Ohio population (0.5 percent) earns more than $1 million annually. But this elite group would receive 39.1 percent of the tax cuts that go to Ohio residents under the tax proposals from the Trump administration. A much larger group, 47.6 percent of the state, earns less than $45,000, but would receive just 6.3 percent of the tax cuts.

While only a few states still remain mired in overtime budget debates, there is plenty of budget and tax news from around the country this week. Efforts are underway to repeal gas tax increases in California and challenge a local income tax in Seattle, Washington. And New Jersey legislators' law to modernize its tax code to tax Airbnb rentals has been vetoed for now.

In the latest example of how the tax code has been abused and distorted, the Cheesecake Factory is claiming the manufacturing tax deduction, apparently for manufacturing cheesecakes, burgers, and other treats.

The Earned Income Tax Credit (EITC) is a policy designed to bolster the earnings of low-wage workers and offset some of the taxes they pay, providing the opportunity for struggling families to step up and out of poverty toward meaningful economic security. The federal EITC has kept millions of Americans out of poverty since its enactment in the mid-1970s. Over the past several decades, the effectiveness of the EITC has been magnified as many states have enacted and later expanded their own credits.

Earlier this year, the Trump administration released some broadly outlined proposals to overhaul the federal tax code. Households in Ohio would not benefit equally from these proposals. The richest one percent of the state’s taxpayers are projected to make an average income of $1,485,800 in 2018.

The broadly outlined tax proposals released by the Trump administration would not benefit all taxpayers equally and they would not benefit all states equally either. Several states would receive a share of the total resulting tax cuts that is less than their share of the U.S. population. Of the dozen states receiving the least by this measure, seven are in the South. The others are New Mexico, Oregon, Maine, Idaho and Hawaii.

Sales taxes are an important revenue source, composing close to half of all state tax revenues. But sales taxes are also inherently regressive because the lower a family’s income, the more the family must spend on goods and services subject to the tax. Lawmakers in many states have enacted “sales tax holidays” (at least 16 states will hold them in 2017), to provide a temporary break on paying the tax on purchases of clothing, school supplies, and other items. While these holidays may seem to lessen the regressive impacts of the sales tax, their benefits are minimal. This policy brief…

Illinois and New Jersey made national news earlier this month after resolving their contentious budget stalemates. But they weren’t the only states working through (and in some cases after) the holiday weekend to resolve budget issues.

This week several states rush to finalize their budget and tax debates before the start of most state fiscal years on July 1. West Virginia lawmakers considered tax increases as part of a balanced approach to closing the state’s budget gap but took a funding-cuts-only approach in the end. Delaware legislators face a similar choice, […]

This week lawmakers in California and Nevada resolved significant tax debates, while budget and tax wrangling continued in West Virginia, and structural revenue shortfalls were revealed in Iowa and Pennsylvania. Airbnb increased the number of states in which it collects state-level taxes to 21. We also share interesting reads on state fiscal uncertainty, the tax experiences of Alaska and Wyoming, the future of taxing robots, and more!

This week, we celebrate a victory in Kansas where lawmakers rolled back Brownback's tax cuts for the richest taxpayers. Governors in West Virginia and Alaska promote compromise tax plans. Texas heads into special session and Vermont faces another budget veto, while Louisiana and New Mexico are on the verge of wrapping up. Voters in Massachusetts may soon be able to weigh in on a millionaire's tax, the California Senate passed single-payer health care, and more!

This week, Kansas lawmakers continued work on fixing the fiscal mess created by tax cuts in recent years, as legislators in Louisiana, Minnesota, Oklahoma, and West Virginia attempted to wrap up difficult budget negotiations before their sessions come to an end, and Delaware lawmakers advanced a corporate tax increase as one piece of a plan to close that state's budget shortfall. Our "what we're reading" section this week is also packed with articles about state and local effects of the Trump budget, new 50-state research on property taxes, and more.

The trend is clear: states are experiencing a rapid decline in state corporate income tax revenue. Despite rebounding and even booming bottom lines for many corporations, this downward trend has become increasingly apparent in recent years. Since our last analysis of these data, in 2014, the state effective corporate tax rate paid by profitable Fortune 500 corporations has declined, dropping from 3.1 percent to 2.9 percent of their U.S. profits. A number of factors are driving this decline, including: a race to the bottom by states providing significant “incentives” for specific companies to relocate or stay put; blatant manipulation of…

This week, transportation funding debates finally concluded with gas tax updates in Indiana, Montana, and Tennessee, and appear to be nearing an end in South Carolina. Meanwhile, Louisiana and Oregon lawmakers debated new Gross Receipts Taxes, and Texas legislators considered eliminating the state’s franchise tax. — Meg Wiehe, ITEP Deputy Director, @megwiehe Louisiana Gov. Bel Edward’s Commercial Activities Tax (CAT) was pulled from committee early this week without a vote due to opposition, […]

This week Alaska‘s House advanced a historic bill to reinstate an income tax in the state, Oklahoma‘s House voted to cancel a misguided tax cut “trigger,” West Virginia‘s governor colorfully vetoed his state’s budget, tax reform debate kicked off in Louisiana, and gas tax updates were considered in South Carolina and Tennessee, among other tax-related news […]

This week in state tax news we saw a destructive tax cut effort defeated in Georgia, a state shutdown avoided in New York, and lawmakers hone in on major tax debates in Massachusetts, Nebraska, South Carolina, and WestVirginia. State efforts to collect taxes owed on online purchases continue to heat up as well. — Meg […]

Thank you for the opportunity to testify on the changes House Bill 36 would make to Alaska's tax treatment of pass-through income. The taxation of pass-through business entities has been a focal point of state and federal tax reform debates for over a quarter century, with a dual focus on minimizing the role of tax laws in determining the choice of business entity and on ensuring that the income of all business entities is subject to at least a minimal tax. My testimony makes two main points: 1. Alaska is one of a small number of states that do not…

This week we see West Virginia, Georgia, Minnesota, and Nebraska continue to deliberate regressive tax cut proposals, as the District of Columbia considers cancelling tax cut triggers it put in place in prior years, and lawmakers in Hawaii, Washington, Kansas, and Delaware ponder raising revenues to shore up their budgets. Meanwhile, gas tax debates continue […]

Our ever-changing economy demands that lawmakers update our tax laws to keep pace. Take, for example, the growth of online sales. As recently as six years ago, Amazon, the nation’s biggest online retailer, only collected sales tax on consumer purchases in five states. This meant that state treasuries were missing critical sales tax revenue, a […]

The federal earned income tax credit (EITC) was designed to keep people working, lift families out of poverty, boost their income to help weather financial emergencies, and help offset payroll taxes, which hit low-income families the hardest. The EITC was founded in 1975 under President Gerald Ford and is considered the most powerful anti-poverty program […]

This week in state tax news saw major changes debated in Hawaii and West Virginia and proposed in North Carolina, a harmful flat tax proposal in Georgia, new ideas for ignoring revenue shortfalls in Mississippi and Nebraska, an unexpected corporate tax proposal from the governor of Louisiana, gas tax bills advance in South Carolina and […]

Governor Kasich’s tax proposal would further reinforce the shift in Ohio’s state and local tax system in favor of affluent residents and against those with lower or middle incomes. Under the plan, Ohioans who made under $56,000 last year – those in the bottom three-fifths of the income spectrum – on average would pay more tax than they do now.

State tax debates have been very active this week. Efforts to eliminate the income tax continue in West Virginia. Policymakers in many states are responding to revenue shortfalls in very different ways: some in Iowa, Mississippi, and Nebraska seek to dig the hole even deeper with tax cuts, while the Missouri House’s response has been […]