State Budget and Tax Archive
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13 States Face Total Budget Shortfall of at Least $23 Billion in 2009; 11 Others Expect Budget Problems
December 18, 2007
For updated data on states facing budget gaps, please see: New Fiscal Year Brings No Relief From Unprecedented State Budget Problems Summary Thirteen states, including several of the nation’s largest, face a combined budget shortfall of at least $23 billion for fiscal 2009. Another 11 states expect budget problems next year or the year … -
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 … -
Statement by Nicholas Johnson, Director of the State Fiscal Project, Center on Budget and Policy Priorities, on the National Conference of State Legislatures’ Survey of Fiscal Conditions
August 9, 2007
Today’s NCSL budget update should serve as a yellow flag to any states considering new tax cuts, which a number of states have enacted in recent months. State tax revenues aren’t keeping pace with the cost of providing services. Instead, many states are relying on past years’ surplus funds to balance their budgets, a sign of … -
State Expenditure Growth Slowing
July 31, 2007
State expenditure growth is projected to slow significantly for fiscal year 2008, which is the 12-month period that began July 1, 2007 in most states. During May, June, and early July, the Center on Budget and Policy Priorities conducted a phone and email survey of state legislative and executive budget officials to learn states’ actual General … -
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 … -
The Problems with Property Tax Revenue Caps
June 21, 2007
Several states (Connecticut, Florida, Minnesota, New Jersey, Rhode Island, and Texas) have recently considered imposing severe caps on property tax revenue.[1] These caps restrict the amount that property tax revenue can increase from year to year to a low fixed percentage, a formula based on the inflation rate, or some combination of the two.… -
Press Release: Governor's Property-Tax Cap the Wrong Solution for Connecticut, Analyst Advises
May 4, 2007
Governor Rell’s proposed cap on property taxes is the wrong solution for the recently rising property tax burdens faced by many Connecticut households, the deputy director of the Center on Budget on Policy Priorities told state lawmakers Friday. In testimony before the General … -
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 … -
Press Release: Pennsylvania Should Preserve and Strengthen Governor's Health Proposal, Analyst Advises
May 3, 2007
Pennsylvania lawmakers should preserve and strengthen key elements of Governor Rendell’s health care proposal, an analyst from the Center on Budget and Policy Priorities told the House Insurance Committee today. The proposal, now before the House as the Pennsylvania Health … -
How Strong Are State Budgets?
April 20, 2007
A new report from the National Conference of State Legislatures finds some improvement in state budget conditions for the current fiscal year (FY 2007), which in most states ends June 30, 2007, and for the upcoming fiscal year.[1] But the improvements that have occurred since budgets’ enactment last spring have been, at best, modest in … -
Rainy Day Funds: Opportunities for Reform
April 16, 2007
States are in considerably better fiscal shape than they have been since 2001. State revenues have grown rapidly over the last few years, in marked contrast to the sluggish growth or declines in revenues between 2001 and 2004. This is good news. However, a return to budget deficits is inevitable at some point.… -
Press Release: Several States Considering Closing Major Corporate Tax Loopholes
April 5, 2007
Governors in six states have recommended that their state adopt a key reform to outlaw a variety of abusive income-tax-avoidance strategies practiced by corporations such as Wal-Mart, a new Center on Budget and Policy Priorities report explains. Eighteen states had already adopted the reform, … -
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.… -
Press Release: Georgia Taxes Working-Poor Families Deeper into Poverty
March 27, 2007
Working poor families in Georgia with incomes well below the federal poverty line face state income tax bills, 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. Georgia’s “tax threshold” (the income … -
Press Release: Hawaii’s Taxation of Working-Poor Families Remains among Worst in Nation
March 27, 2007
Income tax bills for Hawaii’s working-poor families remain 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. The tax cut package that was passed last year and is set to take effect … -
Press Release: State Income Taxes Pushing Many Working-Poor Families Deeper into Poverty
March 27, 2007
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) … -
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] … -
A Frigid Forecast for the Sunshine State: Proposed Revenue Cap as Damaging as Colorado’s TABOR
March 20, 2007
Recently, the Speaker and other leaders of Florida’s House of Representatives unveiled details of their comprehensive property tax relief proposal. One component is a constitutional limit on state and local revenue growth.[1] This proposal deserves a great deal of attention because it is almost a carbon copy of Colorado’s Taxpayer Bill of Rights … -
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 TABOR at Heart: South Carolina's H. 3295 Spending Cap Proposal
March 9, 2007
A proposed bill in South Carolina to limit state spending — H. 3295 — contains the core element of Colorado’s Taxpayer Bill of Rights (TABOR). It limits spending using a formula based on population growth plus inflation. H. 3295 can therefore be expected to cause a deterioration in public services in South Carolina similar … -
President's Budget Would Cut Deeply Into Important Public Services and Adversely Affect States
February 21, 2007
The Administration’s proposed budget for 2008 calls for sizable cuts over the next five years in domestic discretionary programs — the programs (other than defense and international programs) that are funded each year through the annual appropriations process. The reductions would start in 2008, when domestic discretionary programs as a whole would be funded below the levels … -
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 … -
The Administration Again Proposes to Shift Federal Medicaid Costs to States
February 14, 2007
In its new budget, the Administration proposes cuts in federal Medicaid funding that total $24.7 billion over the next five years and $60.9 billion over ten years through a combination of legislative changes and regulatory action. [1] These reductions are more than five times as large over the next five years as the federal Medicaid cuts enacted by the Congress last year … -
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. … -
Federal Grants to States and Localities Cut Deeply in Fiscal Year 2008 Federal Budget
February 6, 2007
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 compensate for declining federal funds. … -
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 …
