Cutting State Income Taxes Counterproductive to Prosperity, Racial Justice
End Notes
[1] Institute on Taxation and Economic Policy, “Who Pays? 6th Edition,” October 2018, https://itep.org/whopays/. In 45 states, lower-income households pay a larger share of their income in state and local taxes than high-income households.
[2] Michael Leachman et al., “Advancing Racial Equity With State Tax Policy,” CBPP, November 15, 2018, https://www.cbpp.org/research/state-budget-and-tax/advancing-racial-equity-with-state-tax-policy.
[3] Michael Leachman, “Mississippi Governor Irresponsibly Proposes to Repeal State’s Income Tax,” CBPP, November 30, 2020, https://www.cbpp.org/blog/mississippi-governor-irresponsibly-proposes-to-repeal-states-income-tax.
[4] Cortney Sanders, “State Millionaires’ Taxes Can Advance Racial Justice,” CBPP, March 15, 2019, https://www.cbpp.org/blog/state-millionaires-taxes-can-advance-racial-justice. At the other end of the income spectrum, 22 percent of the nation’s households are Black or Latinx, but they make up 28 percent of the nation’s poorest households.
[5] The 2013 tax cuts reduced the taxes of the highest-income state residents by 1.5 percent of their income, on average, but by just 0.1 percent of income for the lowest-income North Carolinians, according to the Institute on Taxation and Economic Policy. See Leachman et al., op. cit.
[6] CBPP, “Big Cuts in State Income Taxes Not Yielding Promised Benefits,” updated February 21, 2018, https://www.cbpp.org/research/big-cuts-in-state-income-taxes-not-yielding-promised-benefits.
[7] Michael Leachman, “A Kansas Wake-Up Call for Other States Considering Big Income Tax Cuts,” CBPP, February 23, 2017, https://www.cbpp.org/blog/a-kansas-wake-up-call-for-other-states-considering-big-income-tax-cuts.
[8] Four of the six states that cut personal income taxes significantly in the 2000s saw their share of national employment decline after enacting the cuts. And, in the 1990s, states with the biggest tax cuts grew jobs during the next economic cycle at an average rate only one-third as large as more cautious states. Michael Leachman and Michael Mazerov, “State Personal Income Tax Cuts: Still a Poor Strategy for Economic Growth,” CBPP, updated May 14, 2015, https://www.cbpp.org/research/state-budget-and-tax/state-personal-income-tax-cuts-still-a-poor-strategy-for-economic.
[9] Of the eight states (including the District of Columbia) that enacted lasting “millionaires’ taxes” from 2000 to 2018, seven had per capita personal income growth at least as strong as their neighbors after raising taxes; six had growth in private-sector gross domestic product about as good as or better than their neighbors; and five added jobs at least as quickly as their neighbors. Wesley Tharpe, “Millionaires’ Taxes a Smart Way for States to Invest in Their Future,” CBPP, February 7, 2019, https://www.cbpp.org/blog/millionaires-taxes-a-smart-way-for-states-to-invest-in-their-future.
[10] Nicholas Johnson and Erica Williams, “Without A State Income Tax, Other Taxes Are Higher,” CBPP, March 22, 2012, https://www.cbpp.org/sites/default/files/atoms/files/3-22-12sfp.pdf.
[11] Carl Davis, “Another Reason to Tax the Rich? States with High Top Tax Rates Doing as Well, if Not Better, than States Without Income Taxes,” Institute on Taxation and Economic Policy, September 23, 2020, https://itep.org/another-reason-to-tax-the-rich-states-with-high-top-tax-rates-doing-as-well-if-not-better-than-states-without-income-taxes/.
[12] Wesley Tharpe, “Raising State Income Tax Rates at the Top a Sensible Way to Fund Key Investments,” CBPP, February 7, 2019, https://www.cbpp.org/research/state-budget-and-tax/raising-state-income-tax-rates-at-the-top-a-sensible-way-to-fund-key
[13] Dan S. Rickman and Hongbo Wang, “U.S. State and Local Fiscal Policy and Economic Activity: Do We Know More Now?” August 7, 2018, https://mpra.ub.uni-muenchen.de/88422/1/MPRA_paper_88422.pdf.
[14] CBPP, “Tax Cuts Don’t Boost Small Business Employment,” https://www.cbpp.org/sites/default/files/atoms/files/5-11-15sfp-fact_4.pdf.
[15] In a survey of the founders of many of the country’s fastest-growing firms, only 5 percent cited low tax rates as a factor in deciding where to launch their company. Endeavor Insight, “What Do the Best Entrepreneurs Want in a City? Lessons from the Founders of America’s Fastest Growing Companies,” February 2014, p. 6, https://issuu.com/endeavorglobal1/docs/what_do_the_best_entrepreneurs_want.
[16] Erica Williams and Cortney Sanders, “3 Principles for an Antiracist, Equitable State Response to COVID-19 — and a Stronger Recovery,” CBPP, May 21, 2020, https://www.cbpp.org/research/state-budget-and-tax/3-principles-for-an-antiracist-equitable-state-response-to-covid-19.
[17] Cortney Sanders, “State Millionaires’ Taxes Can Advance Racial Justice,” CBPP, March 15, 2019, https://www.cbpp.org/blog/state-millionaires-taxes-can-advance-racial-justice.
[18] Wesley Tharpe, Michael Leachman, and Matt Saenz, “Tapping More People’s Capacity to Innovate Can Help States Thrive,” CBPP, December 9, 2020, https://www.cbpp.org/research/state-budget-and-tax/tapping-more-peoples-capacity-to-innovate-can-help-states-thrive.