West Virginia

It’s always troubling for those concerned with adequate and fair public finance systems when states prioritize tax cuts at the cost of divesting in important public priorities and exacerbating underlying tax inequalities. But it’s even more nerve-racking when it happens on the eve of what many consider to be an inevitable economic downturn.

Continuing to build upon the momentum of previous years, states are taking steps to create and improve targeted tax breaks meant to lift their most in-need state residents up and out of poverty. Most notably, a range of states are exploring ways to restore, enhance or create state Earned Income Tax Credits (EITC). EITCs are an effective tool to help struggling families with low wages make ends meet and provide necessities for their children. The policy, designed to bolster the earnings of low-wage workers and offset some of the taxes they pay, allows struggling families to move toward meaningful economic…

Gubernatorial addresses and the prospect of teacher strikes continued to take center stage in state fiscal news this week, as governors of Connecticut, Maryland, and Utah gave speeches that all included significant tax proposals. Meanwhile, teachers walked out in Virginia, and many other states debated school funding increases to avoid similar results. State policymakers have many other debates on their hands as well, including what to do with online sales tax revenue, how to cut property taxes without undermining schools, whether and how to legalize and tax cannabis, and whether to update gas taxes for infrastructure investments.

Watch the video recording below for discussion on how ITEP’s distributional data can be part of an advocacy and communications strategy for securing state tax policies that raise enough revenue to fund various priorities. Outline includes a brief overview of findings from the sixth edition of Who Pays? A Distributional Analysis of the Tax Systems in All 50 States as well as insight from state advocates who use Who Pays? and other tax policy analyses research to pursue their legislative agendas.

This week, as Americans in every state celebrated Martin Luther King Jr. Day and reflected on his dream of peaceful protest and racial and economic justice, many eyes were on the teachers’ strike pressing for parts of this dream amid the “curvaceous slopes of California.” Governors and lawmakers in many states—including Arizona, Georgia, Indiana, Louisiana, Nevada, New Mexico, South Carolina, and Wisconsin—discussed ways to raise pay for teachers and/or enhance education investments generally.

State policy toward cannabis is evolving rapidly. While much of the debate around legalization has rightly focused on potential health and criminal justice impacts, legalization also has revenue implications for state and local governments that choose to regulate and tax cannabis sales. This report describes the various options for structuring state and local taxes on cannabis and identifies approaches currently in use. It also undertakes an in-depth exploration of state cannabis tax revenue performance and offers a glimpse into what may lie ahead for these taxes.

Enacting Worldwide Combined Reporting or Complete Reporting in all states, this report calculates, would increase state tax revenue by $17.04 billion dollars. Of that total, $2.85 billion would be raised through domestic Combined Reporting improvements, and $14.19 billion would be raised by addressing offshore tax dodging (see Table 1). Enacting Combined Reporting and including known tax havens would result in $7.75 billion in annual tax revenue, $4.9 billion from income booked offshore.

This week we released a handy guide of policy options for Moving Toward More Equitable State Tax Systems, and are pleased to report that many state lawmakers are promoting policies that are in line with our recommendations. For example, Puerto Rico lawmakers recently enacted a targeted EITC-like credit for working families, and leaders in Virginia and elsewhere are working toward similar improvements. Arkansas residents also saw their tax code improve as laws reducing regressive consumption taxes and enhancing income tax progressivity just went into effect. And there is still time for governors and legislators pushing for regressive income tax cuts…

According to ITEP’s Tax Inequality Index, which measures the impact of each state’s tax system on income inequality, West Virginia has the 37th most unfair state and local tax system in the country. Incomes are more unequal in West Virginia after state and local taxes are collected than before.

The $2 trillion 2017 Tax Cuts and Jobs Act (TCJA) includes several provisions set to expire at the end of 2025. Now, GOP leaders have introduced a bill informally called “Tax Cuts 2.0” or “Tax Reform 2.0,” which would make the temporary provisions permanent. And they falsely claim that making these provisions permanent will benefit […]

The national poverty rate declined by 0.4 percentage points to 12.3 percent in 2017. According to the U.S. Census, this was not a statistically significant change from the previous year. 39.7 million Americans, including 12.8 million children, lived in poverty in 2017. Median household income also increased for the third consecutive year, but this was […]

This report presents a comprehensive overview of anti-poverty tax policies, surveys tax policy decisions made in the states in 2018, and offers recommendations that every state should consider to help families rise out of poverty. States can jumpstart their anti-poverty efforts by enacting one or more of four proven and effective tax strategies to reduce the share of taxes paid by low- and moderate-income families: state Earned Income Tax Credits, property tax circuit breakers, targeted low-income credits, and child-related tax credits.

State lawmakers seeking to make residential property taxes more affordable have two broad options: across-the-board tax cuts for taxpayers at all income levels, such as a homestead exemption or a tax cap, and targeted tax breaks that are given only to particular groups of low- and middle-income taxpayers. One such targeted program to reduce property taxes is called a “circuit breaker” because it protects taxpayers from a property tax “overload” just like an electric circuit breaker: when a property tax bill exceeds a certain percentage of a taxpayer’s income, the circuit breaker reduces property taxes in excess of this “overload”…

Arizona voters learned this week that they will have an opportunity this fall to restore school funding through a progressive tax measure. The effects of the Supreme Court’s Wayfair decision could soon be seen on Michigan and Mississippi roads, as leaders in both states have proposed devoting new online sales tax revenues to infrastructure needs. And new research highlighted in our “What We’re Reading” section discredits one-size-fits-all prescriptions for state economic growth such as supply-side tax-cut orthodoxy, advocating instead for more nuanced and state-specific policymaking.

States’ need for revenue and increased investment in key public services is not unique to this legislative session. But the extent of disinvestment—particularly in education—has been a driving force behind policy discussion and state legislative action this year. In many cases ill-advised tax cuts coupled with persistent school funding cuts led states to this common fate, initiating a powerful and growing trend. Here’s how lawmakers in a handful of state responded:

An updated version of this brief for 2019 is available here. Read this report in PDF. Overview Sales taxes are an important revenue source, composing close to half of all state tax revenues.[1] But sales taxes are also inherently regressive because the lower a family’s income, the more the family must spend on goods and […]

Many state legislators and regulators are considering expanding state-sponsored gambling by allowing betting on major league sports games. But the revenue states could bring in isn’t worth the risk.

An updated version of this blog was published in April 2019. State tax policy can be a contentious topic, but in recent years there has been a remarkable level of agreement on one tax in particular: the gasoline tax. Increasingly, state lawmakers are deciding that outdated gas taxes need to be raised and reformed to fund infrastructure projects that are vital to their economies.

Once again, public school teachers are taking a stand for education and against irresponsible, top-heavy tax cuts that deprive states of the revenue they need to sufficiently fund public services, including education.