Senior Director of State Policy Initiatives
Numerous states are considering — and some have already enacted — sweeping tax and budget proposals that follow recommendations of the American Legislative Exchange Council (ALEC), our new analysis explains, and middle- and lower-income residents could end up paying the price. These proposals would:
cut taxes deeply for wealthy individuals, investors, and corporations; shift tax burdens substantially from well-to-do to middle- and low-income households; and impose strict constitutional or legal limits on revenues or spending that would severely limit states’ ability to provide adequate funds for education, health care, and other priorities, and impair state economic growth.
In 2011, North Carolina enacted the nation’s first-ever exemption of pass-through income up to $50,000 per taxpayer. A year later, Kansas eliminated such taxes entirely, at an estimated cost at least $245 million per year when fully phased in. South Carolina enacted a rate cut specifically for pass-through income in 2012.
Proponents have pushed supermajority legislation in a number of states in recent years, including Arizona, Hawaii, Idaho, Maine, Michigan, Minnesota, New Hampshire, and Texas. In 2011, Wisconsin adopted a supermajority statute.
As our report explains, ALEC’s studies and reports claim that its agenda would boost economic growth and create jobs, but they are disconnected from a wide body of peer-reviewed academic research on public finance. Our report outlines a better way forward for states to meet their balanced budget requirements while also creating the conditions for economic growth and a higher quality of life.