State Budget and Tax Archive
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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 … -
The Current Services Baseline: A Tool for Making Sensible Budget Choices
December 14, 2006
The single most important document produced by a state government each year, and one that receives close public scrutiny, is the state budget. It is both a financial plan for the state and a description of the policies the state intends to pursue in the future. Often the first question asked by budget decision-makers and budget watchers … -
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 … -
State Budgets: On the Edge?
Revised November 8, 2006
States are in considerably better fiscal shape than they have been since 2001. State revenues have grown rapidly over the last year, in marked contrast to the sluggish growth or declines in revenues between 2001 and 2004. For many states, however, a return to budget deficits may not be long in coming. Fiscal conditions appear unstable in at least 24 … -
A Response to the Independence Institute’s Attack on "The Real Story Behind TABOR” Video
October 23, 2006
In September of 2006, the Independence Institute, a conservative think tank from Colorado, issued a paper entitled, “In TABOR Benefits Colorado’s Citizens: A response to misleading video.” This paper criticizes a video released by CBPP in November 2005 (“The Real Story Behind TABOR”: quicktime | windows media) that details … -
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 … -
Double Jeopardy for Local Services Under TABOR
Revised October 5, 2006
Proponents of Maine’s TABOR (Taxpayer Bill of Rights) — a ballot initiative that would place strict spending limits on state and local governments — have been marketing this proposal as a property tax relief package.[1] This is false advertising: TABOR would not create a sustainable reduction in property taxes. … -
Fact Sheet: Criticisms of Maine TABOR Paper Inaccurate
October 4, 2006
On October 3, the Maine Heritage Policy Center issued a press release calling “Double Jeopardy for Local Services Under TABOR,” a recent CBPP analysis of Maine’s TABOR proposal, “inaccurate and flawed.” Unfortunately, Heritage provided inaccurate and misleading … -
Press Release: Maine’s Proposed “TABOR” Likely to Cause Property Tax Increases
October 3, 2006
Maine’s property taxes would not necessarily be lower — and are more likely to increase — if voters adopt the proposed Taxpayer Bill of Rights (TABOR) that is on the ballot in Maine this November, according to a new report, “Double Jeopardy For Local Services Under Tabor,” released today by the Maine Center for … -
States Still Playing "Catch-Up" in New Budgets
August 2, 2006
A new survey by the Center on Budget and Policy Priorities of recently adopted state budgets provides the first 50-state data on spending for fiscal year (FY) 2007, which began July 1 in most states. The survey shows: For the second year in a row, state spending will grow at above-average rates. This recent growth, … -
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 … -
SOS (TABOR) Will Not Jumpstart Michigan's Economy
July 18, 2006
Michigan’s economy is in dire straits. Between 2000 and 2005, Michigan’s six percent decline in employment was the lowest employment growth in the nation and its personal income growth was second lowest among the states. Proponents of the Stop Overspending (SOS) initiative — a constitutional amendment modeled after Colorado’s … -
A State of Decline
July 14, 2006
If the proposed Tax and Spending Control (TASC) initiative— a constitutional amendment to limit expenditures similar to Colorado’s TABOR —had been effective since the 1991-93 biennium in Nevada, state services would have deteriorated substantially in the ensuing 15 years.[1] By limiting state spending growth to a … -
Proposed Discretionary Caps Would Hit States Hard
July 5, 2006
The Senate Budget Committee on June 20 approved legislation (S. 3521) crafted by Budget Committee Chairman Judd Gregg (R-NH) that would make a number of far-reaching changes in the federal budget process.[1] Included in the legislation, which the full Senate may consider this summer, are provisions that would establish … -
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.… -
SCHIP Financing Update
June 5, 2006
The State Children’s Health Insurance Program (SCHIP), jointly financed by states and the federal government, provides comprehensive health insurance coverage to more than four million low-income children, most of whom would otherwise be uninsured.[1] In a prior analysis, we estimated that under current law, a number of states … -
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 Taxpayer Bill of Rights by Any Other Name
April 21, 2006
A proposed ballot initiative in Montana to limitstate spending — “Stop OverSpending” or SOS — is similar in its basic structureand effect to Colorado’s TABOR. Montana’s SOS proposal includes all threefactors that make Colorado’s TABOR (Taxpayer Bill of Rights) the most severestate budget … -
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 … -
Press Release: Economic Claims for TABOR Not Supported By Colorado’s Experience
March 23, 2006
Nearly a dozen states this year are considering a “taxpayer’s bill of rights” (TABOR) modeled on Colorado’s severe limit on state taxes and expenditures. TABOR proponents are claiming that Colorado’s strong economic performance during the 1990s demonstrates its economic benefits. However, a new report from the Center on Budget and Policy … -
Education and Investment, Not TABOR, Fueled Colorado's Economic Growth in 1990s
March 23, 2006
Proponents of Colorado’s “Taxpayer Bill of Rights” (TABOR), the 1992 constitutional amendment that imposed the nation’s strictest limit on taxes and public expenditures, have argued that TABOR is largely responsible for Colorado’s strong economic performance during the 1990s. Few scholars of Colorado’s economy, however, believe this causal relationship exists. The skepticism about TABOR’s role results in part … -
A Faulty Fix: Repairing the "Ratchet" Will Not Repair TABOR
March 21, 2006
Coloradoans recently voted to suspend the Taxpayer’s Bill of Rights (TABOR), the nation’s most restrictive limit on state taxes and expenditures, because it has caused a sharp deterioration in services ranging from education to public health to transportation. Those pushing for the adoption of TABOR-style measures in … -
The Same Old TABOR: Maine's "Taxpayer Bill of Rights" Proposal Fails To Fix Flaws of Colorado's TABOR
March 16, 2006
A ballot initiative proposal in Maine — “An Act to Create a Taxpayer Bill of Rights” — would impose tight limits on state expenditures that would shrink available public services such as education and health care in the same way that Colorado’s TABOR has led to a deterioration in that state.[1] … -
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 … -
Video: The Real Story Behind TABOR
March 2, 2006
This video discusses the impact of the "Taxpayer Bill of Rights" on Colorado and provides lessons for other states that may be considering similar limits on state taxes and spending. -
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 … -
Press Release: State Income Taxes Pushing Hawaii’s Working-Poor Families Deeper Into Poverty
February 22, 2006
Hawaii’s income tax burdens for working-poor families are among the highest in the country, according to a new study from the Center on Budget and Policy Priorities, which examines the income tax burdens on the poor in the 42 states that levy income taxes. A two-parent family of four in Hawaii with income at the federal poverty line of $19,961 owes $470 in state income … -
Press Release: State Income Taxes Pushing Many Working-Poort Families Deeper Into Poverty
February 22, 2006
In nearly half of the states with an income tax, a family of four owes the tax even if its income falls below the poverty line, according to a new report from the Center on Budget and Policy Priorities. In 19 of the 42 states that levy an income tax, the “tax threshold” (the income level at which families begin owing taxes) for tax year 2005 is below $19,961, the poverty line for … -
State Fact Sheets: The Impact of State Income Taxes on Working-Poor and Near-Poor Families
February 22, 2006
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 Administration’s Medicaid Proposals Would Shift Federal Costs To States
February 14, 2006
In its new budget, the Administration proposes net federal Medicaid funding cuts equal to $14 billion over the next five years and $35.5 billion over ten years through a combination of legislative changes and regulatory action. [1] These reductions follow on the heels of significant federal Medicaid cuts ($4.9 billion over five … -
Federal Grants to States and Localities Cut Deeply in Fiscal Year 2007 Federal Budget
February 7, 2006
Grants to state and local governments have long been an important way in which the federal government supports and administers programs efficiently. The new budget, however, continues to significantly erode those grants. This leaves states and localities the option of either curtailing services or increasing their own taxes to … -
How Much Would a State Earned Income Tax Credit Cost?
February 1, 2006
Nineteen 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 2006 legislative session. The following provides guidelines that policymakers and others can use to estimate the cost of a refundable state Earned Income Tax Credit that is set at a … -
Press Release: Income Inequality Grew Across The Country Over The Past Two Decades: Early Signs Suggest Inequality Now Growing Again After Brief Interruption
January 26, 2006
In most states, the gap between the highest-income families and poor and middle-income families grew significantly between the early 1980s and the early 2000s, according to a new study by the Center on Budget and Policy Priorities and the Economic Policy Institute. The study is one of the few to … -
Pulling Apart: A State-by-State Analysis of Income Trends
January 26, 2006
Executive Summary The worst effects of the 2001 recession have largely been left behind. The return of economic growth is good news, but this good news is tempered by the fact that the troubling trends in income distribution during the last decades of the 20th century persist in the current … -
State Fact Sheets: Income Inequality Over the Past Two Decades
January 26, 2006
Alabama Kentucky North Dakota Alaska Louisiana Ohio Arizona Maine Oklahoma …
