Taxes
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Amazon’s Arguments Against Collecting Sales Taxes Do Not Withstand Scrutiny
November 16, 2009
The Internet retailer Amazon.com has offered two primary justifications for opposing efforts of a growing number of states to require the company and other online retailers to charge sales tax. Amazon officials have argued that collecting sales taxes would be administratively burdensome. They have also claimed that the … -
How Much Would a State Earned Income Tax Credit Cost in 2010?
November 12, 2009
The federal Earned Income Tax Credit (EITC) is the nation’s most effective anti-poverty program for working families, lifting 6.5 million people — including 3.3 million children — above the poverty line each year.[1] The 24 state-level EITCs modeled after the federal program complement it in combating … -
Raising State Income Taxes on High-Income Taxpayers
Revised November 11, 2009
As states face increasingly difficult choices for closing the gap between available resources and the cost of needed programs and services, one potential revenue source can be found at the high end of the income tax spectrum. The personal income tax, a major source of revenue for 41 states, can yield a significant amount of money from small rate increases … -
State Earned Income Tax Credits: 2009 Legislative Update
November 10, 2009
An Earned Income Tax Credit (EITC) modeled on the federal program of the same name is now offered in 23 states and the District of Columbia as a way to reduce taxes and supplement wages for low- and moderate-income working families. A large body of evidence has shown that the state and federal EITCs serve a number of important … -
Video: NBC affiliate WVTM in Birmingham, Alabama Cites CBPP on State Income Tax Threshold
November 4, 2009
NBC affiliate WVTM in Birmingham, Alabama Cites CBPP on State Income Tax Threshold
Duration: 0:30
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The Impact of State Income Taxes on Low-Income Families in 2008
November 4, 2009
While some working-poor families get help lifting themselves out of poverty through exemptions from state income taxes, in many states they continue to face substantial state income tax liability. An analysis of state income tax systems for the 2008 tax year shows that: In 16 of the 42 states that levy income taxes, two-parent … -
Press Release: State Income Taxes Push Many Working-Poor Families Deeper Into Poverty
November 4, 2009
Sixteen states taxed working-poor families deeper into poverty last year, according to a new report from the Center on Budget and Policy Priorities. Income tax bills on poor families in those 16 states ranged from a few dollars to several hundred dollars, which is a significant amount for a family struggling to make ends meet, the report said. … -
Which States Tax the Sale of Food for Home Consumption in 2009?
Revised November 4, 2009
Forty-five states and the District of Columbia levy general sales taxes. Most of those states have eliminated, reduced, or offset the tax as applied to food for home consumption. The relief strategies include full or partial exemptions from the sales tax for food purchased for home consumption and credits or rebates to offset the food tax. Of … -
Video: Michael Mazerov Discusses Closing Pennsylvania Corporate Tax Loopholes on WGAL TV
November 2, 2009
Duration: 3:32
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Banning Taxation of Online Hotel Reservations Is Unwarranted and Could Cost States and Localities Billions of Dollars
Revised September 18, 2009
For the past two years, online travel companies like Expedia and Priceline have been seeking enactment of federal legislation that would ban state and local taxation of hotel room rentals when booked by such a company or by a conventional travel agent. Most recently, the legislation was circulated as a potential amendment to … -
Expanding Sales Taxation of Services: Options and Issues
August 10, 2009
Sales of tangible goods dominate most states’ sales tax bases; only a few states impose their sales taxes on a broad array of services. Sales of “non-durable goods” like clothing and light bulbs and “durable goods” like cars and computers generate the vast majority of state sales tax receipts. According to the … -
Press Release: Facing Deficits, More States Considering Taxing Services
August 10, 2009
Broadening the sales tax base to encompass more services, a step that tax experts have long recommended to modernize state tax systems, is receiving renewed attention because of the state fiscal crisis, according to a major new report from the Center on Budget and Policy Priorities. The report provides state-specific information on what … -
New York’s “Amazon Law”: An Important Tool for Collecting Taxes Owed on Internet Purchases
July 23, 2009
The inability to collect all sales taxes that are legally due on purchases made over the Internet costs states billions of dollars a year in lost revenue. In 2008, New York State enacted an innovative law that helps to address this problem. Rhode Island adopted a similar measure this year. All states with sales taxes should … -
Tax Measures Help Balance State Budgets
Updated July 9, 2009
With the recession continuing to widen the gap between shrinking revenues and residents’ increasing need for services, a growing number of states are adopting a balanced approach to their budgets that includes revenue increases as well as spending cuts. Since January 1, 30 states have raised taxes and another seven states are considering doing … -
Video: CNN cites CBPP on State Budget Cuts
July 5, 2009
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Video: Jon Shure Talks About the State Budget Crisis on CSPAN's Washington Journal
July 2, 2009
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Audio Clip: Bloomberg Radio Interviews Iris Lav on the State Budget Crisis
July 1, 2009
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Video: CNN Interviews Jon Shure on the State Budget Crisis
July 1, 2009
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Press Release: New Fiscal Year Brings Painful Spending Cuts, Continued Budget Gaps In Almost Every State
June 29, 2009
The 2010 fiscal year begins for most states July 1. It brings an austere continuation of recession-driven cuts in essential services and poor prospects for improvement through 2011, according to a series of updated reports on state budget conditions issued today by the Center on Budget … -
Video: CNN cites CBPP on States Balancing Budgets with Tax Measures
May 22, 2009
“The Center on Budget and Policy Priorities argues, ‘Listen, cutting services is even more painful for lower-income families than raising taxes.’ They also say those tax increases can target the wealthy. And that’s exactly what we’re seeing…” -
Video: Fox News Channel Interviews Elizabeth McNichol on State Budget Troubles
May 22, 2009
“…A study from the Center on Budget and Policy Priorities reveals 47 of the 50 states are facing substantial budget gaps this year…. All told, the states are nearly $60 billion in the hole for 2009. Next year, the gap will grow to $133 billion. Experts say it won't … -
Video: NBC Nightly News Cites CBPP on State Budget Troubles
May 22, 2009
“The Center on Budget estimates that in 2010 47 states will face deficits totaling $145 billion.” -
Obscure Tax Provision of Federal Recovery Package Could Widen State Budget Gaps
May 19, 2009
States could lose up to $5.5 billion in business income tax revenues over the next three years as a result of a little-known provision in the federal economic recovery package enacted in February. States can, however, easily avoid this revenue loss by making offsetting changes in their tax laws. For states to allow … -
Press Release: More States Are Raising Revenues to Help Close Budget Gaps
May 13, 2009
As tax revenues continue to fall dramatically, making a prolonged budget crisis likely, more states are raising revenues, or considering doing so, to help maintain important services, according to one of a series of updated reports on state budget conditions that the Center on Budget and … -
Minority of States Still Granting Net Operating Loss “Carryback” Deductions Should Eliminate Them Now
Revised May 11, 2009
As a result of the current recession, nearly all states are experiencing the most serious fiscal crisis of at least the last 25 years. Many are already being forced to cut vital services, lay off employees, increase taxes and college tuitions, and tap reserves. In this context, they can ill-afford maintaining any … -
Policy Basics: Where Do Our State Tax Dollars Go?
April 13, 2009
Given the budget problems states face due to the recession, policymakers will confront important choices about how to pay for important government services and programs. To inform this crucial decision making, it is useful to examine where state tax dollars go … -
State Taxes On Inherited Wealth Remain Common
Revised April 10, 2009
Taxes on inherited wealth are a traditional and common revenue source for states. Prior to the passage of the federal estate tax cut in 2001, every state levied an estate tax that allowed them to “pick-up” a share of federal estate tax revenues. The state “pick-up” estate taxes did not increase total estate tax … -
Promoting State Budget Accountability Through Tax Expenditure Reporting
April 9, 2009
Executive Summary Each year states spend tens, maybe hundreds, of billions of dollars on “tax expenditures.” Tax expenditures are tax credits, deductions, and exemptions that reduce state revenue. They can include everything from poverty-reducing tax credits, to middle-class benefits, to corporate subsidies. Tax expenditures cost state treasuries money in … -
Reforming the Tax Treatment of S-Corporations and Limited Liability Companies Can Help States Finance Public Services
April 8, 2009
Nineteen states impose only nominal taxes on businesses organized as subchapter S Corporations (S-Corps) or Limited Liability Companies (LLCs) even though these entities — which generate about one-fourth of all business receipts — benefit from state services just as businesses that are subject to state corporate income taxes do. In addition, many … -
A Majority of States Have Now Adopted a Key Corporate Tax Reform — “Combined Reporting”
Revised April 3, 2009
A growing number of states are adopting a major reform in their corporate income taxes long advocated by state tax experts: “combined reporting.” With the recent enactment of combined reporting legislation in Wisconsin, 23 of the 45 states with corporate income and similar business … -
Tax Foundation Figures Do Not Represent Typical Households’ Tax Burdens
March 31, 2009
Each year, the Tax Foundation releases a report projecting “Tax Freedom Day,” which it describes as the day when Americans will have “earned enough money to pay this year’s tax obligations at the federal, state, and local levels.” [1] The Tax Foundation’s “Tax … -
Most Large North Carolina Manufacturers Are Already Subject To "Combined Reporting" In Other States
January 15, 2009
For the past seven years, there has been serious discussion in North Carolina of adopting an important reform in the state corporate income tax known as mandatory “combined reporting.” Some North Carolina businesses and their lobbying organizations have opposed this change, claiming that it would result in some companies … -
State Revenues Plummet
Updated November 12, 2008
Newly available data compiled by the Rockefeller Institute of Government show conclusively that state revenue dropped sharply in the July-September 2008 quarter, creating large, additional state budget shortfalls.[1] All indications are that revenue collections will worsen further in coming months. Of the 42 states for which … -
Video: Iris Lav, Deputy Director, on State Tax Revenues, NBC Nightly News
November 9, 2008
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The Impact of State Income Taxes on Low-Income Families in 2007
October 29, 2008
Poor families in many states faced substantial state income tax liability for the 2007 tax year. In 18 of the 42 states that levy income taxes, two-parent families of four with incomes below the federal poverty line were liable for income tax. In 15 states, poor single-parent families of three paid income tax in 2007. And 26 … -
Press Release: Many States Tax Working-Poor Families Deeper Into Poverty
October 29, 2008
Poor families faced income tax bills that pushed them deeper into poverty last year in nearly half of the states with an income tax, according to a new report from the Center on Budget and Policy Priorities. Income tax bills on poor families in those 18 states range from a few dollars to several … -
State Earned Income Tax Credits: 2008 Legislative Update
Updated October 8, 2008
Twenty-four states (counting the District of Columbia) have enacted an Earned Income Tax Credit (EITC), a tax reduction and a wage supplement for low- and moderate-income working families. State EITCs are based on the federal EITC, which a large body of evidence has shown to serve a number of important public policy goals. States … -
North Dakota's Measure 2 is Imbalanced and Would Harm Efforts to Secures State's Economic Future
September 18, 2008
North Dakota’s proposed Measure 2, a major change to the state’s income tax that will appear on the November ballot, would be detrimental to the state for three principal reasons: Measure 2 is risky and short-sighted. Measure 2 would cost the state a very large amount of revenue — some $400 million per … -
Caution: the Tax Foundation's State and Local Tax Rankings are Unreliable
Revised August 13, 2008
As it has annually for several years, the Tax Foundation has attempted to measure the current impact of state and local taxation on the residents of each of the 50 states. And once again, the results are very different from the Tax Foundation’s own previous attempts to do this calculation. The Tax Foundations figures — both the … -
States Can Opt Out of the Costly and Ineffective "Domestic Production Deduction" Corporate Tax Break
July 29, 2008
States are losing hundreds of millions of dollars to a relatively new and rapidly growing corporate tax break that in most states never even received a vote in the state legislature. The federal government created this tax break, known as the “domestic production deduction,” in 2004. Since most states base … -
Proponents' Case for a Federally-Imposed Business Activity Tax Nexus Threshold Has Little Merit
June 26, 2008
A bill under consideration in both houses of Congress would take away from the states authority they currently have to tax a fair share of the profits of many corporations that are based out-of-state but do business within their borders. The House version of the “Business Activity Tax Simplification Act,” … -
Proposed “Business Activity Tax Nexus” Legislation Would Seriously Undermine State Taxes on Corporate Profits and Harm the Economy
June 24, 2008
A bill under consideration in both houses of Congress would take away from the states authority they currently have to tax a fair share of the profits of many corporations that are based out-of-state but do business within their borders. The Senate version of the “Business Activity Tax Simplification Act” … -
Property Tax Limitation in the Senate Housing Bill is Unnecessary, Impractical, and Likely to Cause Harm
June 23, 2008
Legislation that the Senate is considering in response to the ongoing foreclosure crisis (H.R. 3221) includes a provision that would allow non-itemizers to deduct property taxes up to an amount of $500 for an individual and $1,000 for a couple.[1] It would deny the deduction, however, to residents of any locality that raises its … -
Eliminating Louisiana's Income Tax Will Harm the State's Budget Outlook, Competitiveness
Revised May 12, 2008
On April 29, the Louisiana Senate voted to phase out the state’s income tax over 10 years without proposing any replacement revenues. The House Ways and Means Committee is expected to consider this proposal, along with others that would significantly cut the income tax but not eliminate it, on Monday May 12. The desire to cut … -
How Much Would a State Earned Income Tax Credit Cost in 2009?
May 5, 2008
Twenty-three states have enacted tax credits for low- and moderate-income working families based on the federal Earned Income Tax Credit. A number of additional states are considering enacting EITCs in the 2008 legislative session. The following provides guidelines that policymakers and others can use to estimate … -
State Fact Sheets: Income Inequality Over the Past Two Decades
April 9, 2008
Income Inequality Within the States: Ratio: Incomes of Top Fifth of Families Compared to Incomes of Bottom Fifth of Families State-specific fact sheets containing information on income inequality over the past two decades, including the changes in average incomes and income ratios, are provided through the links below. … -
Pulling Apart: A State-by-State Analysis of Income Trends
April 9, 2008
I. Executive Summary A state-by-state examination of trends in income inequality over the past two business cycles finds that inequality has grown in most parts of the country since the late 1980s. The incomes of the country’s highest-income families have climbed substantially, while middle- and lower-income families have … -
Press Release: Income Inequality Grew in Most States Over Past Two Decades
April 9, 2008
The gap between the richest and poorest families, and between the richest and middle-income families, grew significantly in most states over the past two decades, according to a new study by the Center on Budget and Policy Priorities and the Economic Policy Institute. In fact, the nation’s … -
Press Release: Most Large Iowa Manufacturers Already Comply With Proposed Corporate Tax Reform in Other States
April 3, 2008
Almost all major Iowa manufacturers maintain facilities in other states that have adopted a corporate tax reform measure known as “combined reporting” — including several outspoken opponents of Governor Culver’s proposal to adopt combined reporting in Iowa, according to … -
Almost All Large Iowa Manufacturers Are Already Subject to "Combined Reporting" in Other States
April 3, 2008
For the second year in a row, Governor Chet Culver has recommended that the Iowa legislature enact an important reform in the state corporate income tax known as “combined reporting.” Some Iowa corporations have opposed this change, claiming that it would result in some companies leaving the state or shunning Iowa for … -
Statement by Iris Lav, Deputy Director, on Provision in Bipartisan Senate Housing Package Affecting Local Property Taxes
April 3, 2008
While the Senate housing package would establish a new property tax deduction for non-itemizers, a little-noticed provision of the bill would deny the new deduction to any resident of a locality that raises its property tax rate between April 2 and next January 1. By preventing localities from … -
Idaho is the Only State to Exclude Low-Income Families From Its Grocery Tax Credit
February 28, 2008
Idaho is one of seven states that taxes groceries at the same rate as other goods. It is one of five states that offer a credit or rebate to mitigate the tax. But even though the tax falls most heavily on low-income families, Idaho—unlike any other state—excludes many poor families (mostly working families) from … -
Using Income Taxes to Address State Budget Shortfalls
February 21, 2008
States are on the brink of their worst fiscal problems since the 2001 recession. At least half the states are anticipating budget shortfalls for next year (fiscal year 2009). For those states that have estimated the size of the gap, estimated deficits range from $34 billion to $38 billion in total. Among affected states, … -
State Low-Income Tax Reflief in the Absence of an Income Tax
Revised February 14, 2008
Most states target tax relief to low- and moderate-income households. In part, this is because without such relief, state and local taxes would absorb a much larger share of the income of poor and near-poor families than of families at higher income levels. This is particularly true in states that do not use a personal income tax, … -
Statement by Nicholas Johnson, Director of the State Fiscal Project, Center on Budget and Policy Priorities, on The Maryland Senate Budget and Taxation Committee’s Tax Bill
November 7, 2007
The tax bill passed by the Maryland Senate Budget and Taxation Committee is a disappointing step backwards from Governor O'Malley’s tax reform proposal. It bows to pressure from powerful corporate interests to abandon the closure of wasteful corporate tax loopholes. … -
The Technology Council of Maryland’s Case Against Combined Reporting: A Rebuttal
November 5, 2007
Introduction and Summary In a letter to State Senator Rona E. Kramer and Delegate Brian J. Feldman dated October 29, 2007, the Technology Council of Maryland (TCM) states its opposition to Governor Martin O’Malley’s recommendation that Maryland adopt mandatory “combined reporting” under its corporate income tax. … -
Press Release: Governor's Plan Would Reduce Income Taxes for Vast Majority of Maryland Residents
November 1, 2007
More than three-fourths of Maryland taxpayers would pay less in state income taxes under Governor O’Malley’s income-tax restructuring plan, and only the highest-income 2 percent of taxpayers would pay more, a Center on Budget and Policy Priorities analyst told state lawmakers Thursday. The General Assembly is considering this and … -
Testimony: Nicholas Johnson on Maryland Tax Rate Restructuring
November 1, 2007
Summary: The governor’s proposed income tax restructuring plan would change a nearly-flat Maryland income tax rate structure into a progressive rate structure. This is sound policy on several grounds: Most Marylanders would be better off under this element of the governor’s proposal. Data from the … -
State Corporate Tax Shelters and the Need for “Combined Reporting”
October 26, 2007
Executive Summary A growing number of states are adopting or considering a key corporate tax reform known as “combined reporting.” Most large corporations consist of a parent corporation and its subsidiaries; combined reporting effectively treats the parent and most or all of its subsidiaries as a single corporation … -
A Simple, Inexpensive Way for Maryland to Protect Certain Low-Income Workers from Tax Increases
October 26, 2007
Closing Maryland's budget shortfall will require significant tax increases, including some that will have a disproportionate impact on the state’s lowest-income workers. Governor O'Malley's proposal, for example, relies heavily on increases in the sales tax, tobacco tax, vehicle titling tax, and gambling revenues, all of which would hit … -
Additional Options for Revenue in Maryland
October 26, 2007
Executive Summary Maryland Governor Martin O’Malley has proposed a set of new revenue options for the state. The additional revenue is needed to close a projected budget deficit and continue to finance education, health care, transportation, and other public service at current-law levels. Without the additional revenue, the state would need … -
Options for Protecting Maryland’s Low- and Moderate-Income Families from Regressive Tax Increases
October 26, 2007
Executive Summary Maryland faces large budget deficits in the coming fiscal year and for the foreseeable future. Putting the state on secure fiscal footing will almost certainly require significant tax increases. Many of the tax increases currently under consideration would impose a disproportionate cost on Maryland’s low- and … -
Press Release: Maryland Governor's Tax Plan Would Improve State Revenue System, but Legislature Could Make Further Improvements
October 26, 2007
Maryland Governor Martin O’Malley’s revenue proposal would make a number of important improvements to the state’s tax system, but the legislature could go further by providing more tax relief to low-income families and increasing progressivity. “By closing corporate loopholes, making the income tax more progressive, … -
Press Release: Florida Should Consider “Circuit Breaker” to Provide Well-Targeted Property Tax Relief
October 12, 2007
As Florida’s legislature prepares to once again consider property tax relief measures next week, a new report from the Center on Budget and Policy Priorities outlines a simple, well-targeted approach that is not being considered. Called a “circuit breaker,” it could provide substantial relief to up to 2.5 million … -
Targeted Property Tax Reform: Designing a Circuit Breaker for Florida
October 12, 2007
Property taxes in Florida are, on average, moderate when compared to those in other states. For example, Florida property taxes as a percent of residents' income ranked 19th in the nation in 2005.[1] In Florida as in most other states, however, families with lower incomes tend to pay higher property taxes relative to their incomes … -
The Internet Tax Freedom Act and the "Digital Divide"
September 10, 2007
Congress is again considering whether to make the “Internet Tax Freedom Act” (ITFA) permanent. Enacted in 1998 and temporarily renewed in 2001 and 2004, ITFA banned new state and local taxes on “Internet access” services. States and localities were barred from imposing their sales taxes on the typical $10 to $50 monthly fee … -
Renewing the “Internet Tax Freedom Act” Could Have an Especially Adverse Impact on Kentucky, Michigan, Ohio and Texas
Revised August 31, 2007
Congress is again considering whether to renew the “Internet Tax Freedom Act” (ITFA). Enacted in 1998 and temporarily renewed in 2001 and 2004, ITFA banned new state and local taxes on “Internet access” services. The primary goal of the law was to bar states and localities from imposing their sales taxes on the … -
Making the “Internet Tax Freedom Act” Permanent Could Lead to a Substantial Revenue Loss for States and Localities
Revised August 30, 2007
On May 23 and July 26, 2007, the Senate Commerce Committee and the Subcommittee on Commercial and Administrative Law of the House Judiciary Committee, respectively, held hearings on the “Internet Tax Freedom Act” (ITFA). ITFA was enacted in 1998 and renewed in 2001 and 2004. The law generally bars state and local taxation … -
Hawaii's Income Tax on the Working Poor: A Post-Session Update
July 18, 2007
On June 26, Hawaii Governor Linda Lingle signed SB 1882, which expands Hawaii's refundable low-income tax credit. The bill's passage follows a long debate about how best to cut taxes on Hawaii’s low-income working families, who face higher income taxes than such families in almost any other state.[1] SB 1882 provides important … -
Illinois' Proposed Gross Receipts Tax
May 3, 2007
Governor Blagojevich of Illinois has proposed a new revenue source, a gross receipts tax (GRT), to provide funds for a major health care expansion, public education, property tax relief, and to help address the state’s long-standing budget problems. A GRT is a low-rate tax on the receipts of all types of businesses. The … -
State Earned Income Tax Credits and the "Overpayments" Issue
March 28, 2007
The federal Earned Income Tax Credit is a tax credit for low- and moderate-income working families. The EITC is widely hailed for its success in subsidizing work, reducing poverty and making the tax code fairer. For these reasons, 20 states have enacted EITCs that piggyback on the federal credit and thereby further its successes. … -
State Fact Sheets: The Impact of State Income Taxes on Low-Income Families in 2006
March 27, 2007
State-specific fact sheets containing information on the impact of state income taxes on working-poor and near-poor families, including historical trends, are provided through the links below. States without fact sheets do not levy income taxes. … -
The Impact of State Income Taxes on Low-Income Families in 2006
March 27, 2007
Poor families in many states face substantial state income tax liability for the 2006 tax year. In 19 of the 42 states that levy income taxes, two-parent families of four with incomes below the federal poverty line are liable for income tax. In 15 of the 42 states, poor single-parent families of three pay income tax.… -
Tax Foundation Estimates of State and Local Tax Burdens Are Not Reliable
March 27, 2007
In March 2007, the Tax Foundation is expected to release its annual report on “Tax Freedom Day,” which it describes as the day when “Americans will finally have earned enough money to pay off their total tax bill for the [current] year.” For each state, the report will show the Tax Foundation’s estimate of state and local taxes paid by residents of that … -
The Property Tax Circuit Breaker
March 21, 2007
Many individuals and families who pay a high share of their income in property taxes are eligible for “property tax circuit breakers”— refunds provided by the state government to those whose property tax payments are deemed too great. Some 18 states deliver roughly $3 billion per year in circuit breaker programs.[1] … -
Lower Taxes and Economic Growth: Response to a Flawed Analysis
March 20, 2007
When the Speaker and other leaders of Florida’s House of Representatives released their plan to roll back property taxes and place a tight growth limit on state and local revenues, they included a report in their release by the firm of Arduin, Laffer & Moore that claims lower taxes will lead to higher economic growth. This report takes an … -
A State EITC Is a Cost-Effective Way to Ease Hawaii’s High Income Tax Burden on the Poor
February 14, 2007
Hawaii continues to impose a higher income tax burden on low-income working families than almost any other state. A costly tax cut enacted in 2006 did little to address this problem. As a result, Hawaii continues to collect income tax from families with income thousands of dollars below the poverty line. And families in poverty … -
Press Release: Hawaii’s Tax Burdens on Poor among the Nation’s Largest; State EITC Would Provide Targeted Relief
February 14, 2007
Hawaii levies among the nation’s highest income taxes on low-income working families and its national ranking is worsening by some measures, according to a report from the Center on Budget and Policy Priorities. Creation of a state Earned Income Tax Credit, one of two policy … -
State Corporate Tax Disclosure: The Next Step in Corporate Tax Reform
February 13, 2007
Executive Summary Data from numerous sources suggest that something is seriously wrong with the state corporate income tax. The share of tax revenue supplied by this tax in the 45 states that levy it fell from more than 10 percent in the late 1970s, to less than 9 percent in the late 1980s, to less than 7 percent today. The effective … -
How Much Would A State Earned Income Tax Credit Cost in 2008?
February 7, 2007
This report was updated on March 5, 2008 to reflect new data. Click here to view the new analysis. Twenty states have enacted tax credits for low- and moderate-income working families based on the federal Earned Income Tax Credit. A number of additional states are considering enacting EITCs in the 2007 legislative session. … -
Maine Could Tax More Services under Its Sales Tax
February 1, 2007
Maine’s sales tax could be modernized to yield more revenue and make the sales tax fairer. Maine taxes very few services under its sales tax; the sales tax is largely levied on purchases of tangible goods. Yet production and consumption have been shifting in the U.S. economy — and in Maine’s economy — from goods to services … -
Improving State Fiscal Policies in The 2007 Legislative Sessions
Revised January 26, 2007
State policymakers can make substantial improvements to their state fiscal systems in 2007 legislative sessions. This paper is a guide to relevant Center on Budget and Policy Priorities analyses that describe some opportunities for improvement as well as challenges that states may face this year. Each of these analyses … -
Research Findings Cast Doubt on Argument That Estate Taxes Harm State Economies
January 9, 2007
In June 2001, President Bush signed federal legislation to phase out the federal estate tax. This legislation repeals the federal estate tax by 2010 and also effectively repealed by 2005 the state “pickup” taxes through which states share in federal estate tax collections. States can prevent this loss of revenue by … -
Press Release: Maine Should Build on its Strengths in Addressing Fiscal and Economic Challenges, Expert Advises
January 8, 2007
Maine should both strengthen existing methods of providing property-tax relief and promote economic growth through investments in areas like tourism and higher education, according to Iris Lav, deputy director of the Washington, DC-based Center on Budget and Policy Priorities, in a speech … -
State Revenue Losses From the Federal "Domestic Production Deduction" Will Double in 2007
January 2, 2007
In 2004, the federal government created an entirely new corporate tax break that is costing not only the federal government but also 29 states a large, and growing, amount of money. Known as the “domestic production deduction,” the tax break allows many corporations to claim a tax deduction equal to a percentage of certain … -
Tax Cuts and Continued Consequences
December 19, 2006
With some states contemplating tax cuts in 2007, this is a useful time to examine the effects of the last major round of state tax cuts, during the 1990s. Some 44 states enacted tax cuts in the middle and late 1990s. Many states were restrained in their tax-cutting, but a few were not. During that period, six states reduced their annual … -
Together, State Minimum Wages and State Earned Income Tax Credits Make Work Pay
Revised November 20, 2006
In recent years, federal policies aimed at ensuring adequate income for working families have not kept up with inflation, leaving many working families struggling to make ends meet. The particular culprit is the federal minimum wage, which has not been adjusted for inflation since 1997. Other policies such as the federal Earned … -
A Rising Number of State Earned Income Tax Credits are Helping Working Families Escape Poverty
Revised October 20, 2006
An Earned Income Tax Credit is a tax reduction and a wage supplement for low- and moderate-income working families. The federal government administers an EITC through the income tax. So do many states. States that enact EITCs can reduce child poverty, increase effective wages, and cut taxes for families struggling to make ends meet. … -
Tax Cuts on Layaway
October 10, 2006
State governments face major fiscal challenges in the next few years. They will need adequate revenue bases to tackle those challenges. But a number of states in 2006 cut taxes deeply without identifying how the tax cuts will be financed. They could do this, despite balanced budget requirements, because they … -
Press Release: House to Consider Restricting States’ Authority to Tax Corporate Profits
July 24, 2006
A bill expected to reach the floor of the U.S. House of Representatives tomorrow would strip states of their authority to tax a fair share of the profits of many corporations that are headquartered out of state but do business within their borders. Under the bill (H.R. 1956, “The Business Activity Tax Simplification Act”), large amounts of … -
Estate Tax "Compromise" Proposals May Endanger State Estate and Inheritance Taxes
Revised June 23, 2006
On June 22, the House of Representatives approved an estate tax proposal introduced by House Ways and Means Chairman Bill Thomas. While supporters of the proposal describe it as a “compromise,” it would in fact eliminate the vast bulk of estate tax revenue and has been more aptly characterized as “near repeal.… -
The Impact of Hawaii's Income Tax on Low-Income Families: An Update
May 4, 2006
In the next few days, Hawaii’s legislature will consider the conference agreement on changes to Hawaii's income tax, HB957. This agreement, which appears to have the support of legislative leadership and the governor, increases the standard deductions and expands the tax brackets beginning in tax year 2007. [1] The bill fails … -
A "Super" Bad Idea: Requiring a Two-thirds Legislative Supermajority to Raise Taxes Protects Special Interest Tax Breaks and Gives Budget Veto Power to a Small Minority of Legislators
April 25, 2006
Enactment of state legislation normally requires approval by a majority vote in each house of the legislature plus the governor’s signature. Anti-tax activists in Kansas, however, are proposing to require a two-thirds supermajority vote of each house of the state legislature plus the governor’s signature in order to … -
A Dubious Honor for Hawaii
April 17, 2006
Last week, Alabama's governor signed into law new legislation that provides major income tax relief to low-income working families. As a result of this change in Alabama law, Hawaii — which was second to Alabama in the burden its income tax imposes on the poor — is on track to inherit Alabama’s standing as the … -
Tax Foundation Estimates of State and Local Tax Burdens are not Reliable
April 10, 2006
In April 2006, the Tax Foundation is expected to release its annual report on “Tax Freedom Day,” which it describes as the day when “Americans will finally have earned enough money to pay off their total tax bill for the [current] year.” For each state, the report will show the Tax Foundation’s … -
Tax Cuts Proposed in President's Budget Would Ultimately Cause Large State Revenue Loses
March 16, 2006
When the federal government cuts taxes, those tax cuts sometimes cause reductions in state revenue as well. This occurs because most states with individual and/or corporate income taxes use the federal definitions of adjusted gross income and corporate income as the basis for their own income taxes. When a tax cut reduces the … -
A Hand Up: How State Earned Income Tax Credits Help Working Families Escape Poverty in 2006
March 8, 2006
Executive Summary An Earned Income Tax Credit is a tax reduction and a wage supplement for low- and moderate-income working families. The federal government administers an EITC through the income tax. So do many states. States that enact EITCs can reduce child poverty, increase effective wages, and cut taxes for families struggling to make ends … -
Press Release: State Tax Preferences for Seniors Will Grow More Costly As Boomers Retire: Study Outlines Ways to Target Tax Relief to Seniors in Need
March 6, 2006
The special tax preferences most states provide to seniors — often irrespective of income — will place growing strains on state budgets as the population ages, according to a new report from the Center on Budget and Policy Priorities. The report recommends that states reexamine … -
Revisiting State Tax Preferences for Seniors
March 6, 2006
By the year 2030 one in five Americans will be over the age of 65 according to Census Bureau projections. Increasingly, state budgets will be stretched thin by the healthcare and other needs of the nation’s elderly. For example, states provide on average 47 percent of the funding for the Medicaid program, which pays for the vast … -
The Impact of State Income Taxes on Low-Income Families in 2005
February 22, 2006
Poor families in many states face substantial state income tax liability for the 2005 tax year. In 19 of the 42 states that levy income taxes, two-parent families of four with incomes below the federal poverty line are liable for income tax. In 16 of the 42 states, poor single-parent families of three pay income tax. And 31 of these states …
