Say it Ain’t So: Kentucky’s Missed Opportunity

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Kentucky Governor Steve Beshear has unveiled a 22-point tax reform plan that includes a new refundable state earned income tax credit (EITC), limits on the generous $41,110 pension exclusion and expanding the sales tax base to include a wider range of services. The plan is based in part on the recommendations of the Governor’s Blue Ribbon Commission on Tax Reform, which were released in 2012. Beshear’s plan also includes a cut in the personal and corporate income tax rates and an increase in the cigarette tax. In total the proposal increases state revenues by $210 million a year.

The proposal is a mixed bag.  While it raises much needed revenue and includes several reform-minded options, it falls short of improving the fairness of the state’s tax structure. The introduction of an EITC and limiting the current pension exclusion are a good start, but changing the corporate income tax apportionment formula to single sales factor and lowering personal and corporate income tax rates are costly ideas that benefit wealthier Kentuckians.

The Kentucky Center for Economic Policy (KCEP) issued a brief containing an Institute on Taxation and Economic Policy (ITEP) analysis showing that Governor Beshear’s proposal doesn’t improve tax fairness in any meaningful way. KCEP concludes that “the combined impact of the tax increases and tax cuts in Governor Beshear’s reform proposal would not help improve the regressive nature of Kentucky’s tax system.”  This is because the new revenue raised from the Governor’s plan comes almost entirely from regressive changes to the sales tax base and hiking cigarette taxes.

Governor Beshear deserves some credit for proposing tax reform despite this being an election year, but he missed an opportunity to truly reform the state’s tax structure by making it more fair and adequate. Let’s hope that Kentucky legislators follow KYCEP’s advice and “build on the good parts of the plan while making improvements.”

Congress Is About to Shower More Tax Breaks on Corporations After Telling the Unemployed to Drop Dead

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If Congress decides it cannot spend money to help working families and the unemployed without offsetting the costs by cutting spending, then lawmakers should also refuse to enact tax cuts for businesses unless they can offset the costs by closing business tax loopholes. Sadly, both Democrats and Republicans refuse to acknowledge this commonsense principle as they discuss enacting the so-called “tax extenders” without closing any business tax loopholes — after failing to extend Emergency Unemployment Compensation (EUC) because of a dispute over how to offset the costs.

If there is any federal spending that should not be paid for, surely it is EUC and other temporary spending that is designed to address an economic downturn. As our friends at the Coalition on Human Needs explain:

In January, the national unemployment rate dropped to 6.6 percent from 6.7 percent in December, but jobs grew by a less than expected 113,000. Congress, by failing to renew unemployment benefits, is making things worse.  According to the Congressional Budget Office, restoring EUC throughout 2014 will increase employment by 200,000 jobs… EUC has long been considered an emergency program that does not have to be paid for by other spending reductions or revenue increases. Five times under President George W. Bush, when the unemployment rate was above 6 percent, unemployment insurance was extended without paying for it and with the support of the majority of Republicans.

Unfortunately, on February 6, a measure to extend EUC by three months and another to extend it by 11 months both failed to garner the 60 Senate votes needed for passage.

Compare this to Congress’s approach to provisions that are often called the “tax extenders” because they extend a variety of tax breaks that mostly go to business interests. Unlike EUC, these provisions cannot be thought of as temporary, emergency measures. Even though these tax cuts are officially temporary, Congress has routinely extended them every couple of years with little or no review of their impacts, so that they function as permanent tax cuts.

And, sadly, lawmakers of both parties are guilty of enacting these provisions time after time without closing any business tax loopholes to offset the costs. In some years, Democrats have introduced bills that would close tax loopholes to offset the cost of the extenders. For example, in 2009, Citizens for Tax Justice and several other organizations supported legislation that would have offset the costs of the tax extenders by closing the “carried interest” loophole and other tax loopholes.  

But in other years, neither party even bothered to discuss paying for the tax extenders. This happened the last time they were enacted as part of the “fiscal cliff” legislation that also extended most of the Bush-era tax cuts. Sadly, 2014 may be another year when neither party even pretends to be “fiscally responsible” when it comes to lavishing businesses with tax breaks. Several news reports indicate that Senators are discussing how to enact the tax extenders with as little debate as possible. 

There Is No Provision among the “Tax Extenders” that Is So Beneficial that It Justifies Enacting the Entire Package Without Offsetting the Costs

The feeling among lawmakers that the tax extenders must be enacted under absolutely any circumstances is simply not justified, as demonstrated by examining the most costly provisions among them. This is explained in detail in CTJ’s report on the tax extenders.

The pie chart above, which is taken from the CTJ report, illustrates the costs of the individual tax extenders provisions the last time they were enacted, at the start of 2013 as part of the “fiscal cliff” legislation.

The most costly is the research credit, which is supposed to encourage companies to perform research but appears to subsidize activities that are not what any normal person would consider research, and activities that a business would have performed in the absence of any tax break including activities that the business performed years before claiming the credit. The second most costly is the renewable electricity production credit, which even many supporters agree will be phased out at some point in the near future. The third most costly is the seemingly arcane “active financing exception,” which expands the ability of corporations to avoid taxes on their “offshore” profits and which General Electric publicly acknowledges as one of ways it avoids federal taxes. These three tax provisions make up over half of the cost of the tax extenders.

Next in line is the deduction for state and local sales taxes. Lawmakers from states without an income tax are especially keen to extend this provision so that their constituents will be able to deduct their sales taxes on their federal income tax returns. But, as the CTJ report explains, most of those constituents do not itemize their deductions and therefore receive no help from this provision. Most of the benefits go to relatively well-off people in those states.

Even the provisions that sound well-intentioned are really just wasteful subsidies for businesses. The Work Opportunity Tax Credit ostensibly helps businesses to hire welfare recipients and other disadvantaged individuals, but here’s what a report from the Center for Law and Social Policy concludes about this provision:

WOTC is not designed to promote net job creation, and there is no evidence that it does so. The program is designed to encourage employers to increase hiring of members of certain disadvantaged groups, but studies have found that it has little effect on hiring choices or retention; it may have modest positive effects on the earnings of qualifying workers at participating firms. Most of the benefit of the credit appears to go to large firms in high turnover, low-wage industries, many of whom use intermediaries to identify eligible workers and complete required paperwork. These findings suggest very high levels of windfall costs, in which employers receive the tax credit for hiring workers whom they would have hired in the absence of the credit.

It’s Time for Congress to Change How It Does Business

For Congress to enact unnecessary tax cuts for businesses without closing any business tax loopholes would be very problematic under any circumstances. To do so now, after making clear that help will not be provided to the unemployed unless the costs are offset with spending cuts, is simply outrageous.

What’s NOT in the Queue for Netflix: A Tax Bill

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Hidden in the footnotes of the financial report released last week by Netflix is an admission that the company reduced its taxes by $80 million in 2013 by deducting the “cost” of executive stock options. This means that as a result of this single tax break, the company didn’t pay a dime of federal or state income tax on its $159 million in US profits last year.

Last year CTJ reported that a dozen emerging tech firms, including Twitter, Facebook and Priceline, were poised to shelter as much as $11 billion in profits from tax using this arcane loophole. For some of these companies, the stock option tax break can singlehandedly wipe out all income tax liability, as it did for Facebook last year.

Stock options are rights to buy stock at a set price. Corporations sometimes compensate employees (particularly top executives) with these options. The employee can wait to exercise the option until the value of the stock has increased beyond that price, thus enjoying a substantial benefit. The problem is that poorly designed tax rules allow corporations to deduct the difference between the market value of the stock and the amount paid when the stock option is exercised. In practice, corporations are often able to deduct more for tax purposes for stock options than they report to shareholders as their cost.

The defenders of this tax break sometimes argue that when companies pay their employees, it shouldn’t matter whether the pay takes the form of salaries and wages or stock options. But this argument glosses over the fact that while paying salaries imposes a dollar-for-dollar cost on employers, issuing stock options simply does not. As we have argued elsewhere, a sensible analogy is airlines giving employees the opportunity to fly free on flights that aren’t full, which costs the airlines nothing. It would be ludicrous to argue that airlines should be able to deduct the retail value of these tickets.

Senator Carl Levin (D-MI) has introduced legislation that would pare back (but not repeal entirely) the stock option tax break. Levin’s legislation (the Cut Unjustified Tax Loopholes Act) would address situations in which corporations take tax deductions for stock options that exceed the cost they report to their shareholders. It would also remove the loophole that exempts compensation paid in stock options from the existing rule capping companies’ deductions for compensation at $1 million per executive.

Allowing high-profile tech companies to zero out their taxes using phantom costs erodes the public’s faith in the tax system; any meaningful attempt to reform our corporate tax should remedy this situation.

IBM’s Nonsensical Response to CTJ’s Finding that It Paid a 5.8 Percent Effective Federal Tax Rate

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Last week, CTJ published its finding that International Business Machines (IBM) has paid U.S. federal corporate income taxes equal to just 5.8 percent of its $45.3 billion in pretax U.S. profits over the five year period from 2008 through 2012. Today IBM responded by trying to change the subject to what it paid in one single year, and what it may or may not pay in future years.

To understand IBM’s evasive argument, first remember that CTJ’s corporate tax numbers are from the form 10-K, the document corporations file with the Securities and Exchange Commission (SEC) to disclose relevant information to shareholders. We report what are recorded on the 10-K as “current” U.S. income taxes (the federal income taxes paid by the corporation in a given year) and the profits earned by the corporation in the U.S. that year. The current taxes paid over a five-year period divided by the U.S. profits earned over a five-year period is the effective federal corporate tax rate over a five-year period.

Here the description from Politico’s “Morning Tax” of what happened when IBM was asked about CTJ’s analysis:

IBM argues that the CTJ analysis does not take into consideration the fact that the tech company heavily relies on deferrals to lower their year-to-year income tax bill noting that, according to its calculations, the company paid more than $2.5 billion in taxes for its 2012 domestic operations. That comes out to a tax rate of 27 percent, a spokesperson for the company told Morning Tax.

First, IBM focuses only on its U.S. effective tax rate in 2012, which our own figures show was in fact higher than in the previous four years. But IBM’s federal tax rate wasn’t 27 percent; it was only 14 percent. In the previous four years, IBM’s federal tax rate was only 3.5 percent, which is why IBM’s five-year effective rate is 5.8 percent.

Second, IBM seems to think that we should give the company credit for taxes that it did not pay, specifically the “deferred” taxes that it may or may not pay in the future. But quite reasonably, we count such “deferred” taxes only when and if they are actually paid.

“IBM is happy to minimize its federal tax bill, but apparently not so happy for the public to know just how little it pays to support our country,” said CTJ director Bob McIntyre. “If and when IBM starts paying its fair share in taxes, we’ll be pleased to report it. But that hasn’t been the case for at least the past 12 years.” 

The States Taking on Real Tax Reform in 2014

Note to Readers: This is the fifth post of a five-part series on tax policy prospects in the states in 2014. Over the course of several weeks, The Institute on Taxation and Economic Policy (ITEP) highlighted tax proposals that were gaining momentum in states across the country. This final post focuses on progressive, comprehensive and sustainable reform proposals under consideration in the states.

State tax policy proposals are not all bad news this year.  There are some promising efforts underway that would fix the structural problems with state tax codes and improve tax fairness for low- and middle-income families. All eyes are on Illinois as lawmakers grapple with how to raise much needed revenue after their temporary income tax hike expires. Many are hoping the timing is now right for a real debate about a graduated income tax. Washington DC’s Tax Revision Commission has proposed a number of sensible reforms. And, lawmakers in Hawaii and Utah are expected to seriously debate ways to improve their states’ tax fairness.

Illinois Though there has been much legislative activity in Springfield about corporate tax breaks, the arguably more important issue facing lawmakers is the state’s temporary income tax rate increase that is set to decrease in 2015. Given this upcoming rate reduction, lawmakers and the public are weighing in on alternative ways to fund vital services, including the merits of a progressive income tax.

District of Columbia – DC’s Tax Revision Commission set the stage for real tax reform this Spring when it recommended expanding the sales tax base, enhancing the city’s Earned Income Tax Credit (EITC) for childless workers, boosting the personal exemption and standard deduction, reforming the District’s income tax brackets, and phasing-out the value of personal exemptions for high-income taxpayers. The Commission’s proposal is hardly perfect: it includes an expensive giveaway for people with estates worth over $1 million, as well as a slight cut in the city’s top income tax rate (in exchange for making that temporary rate permanent).  But the plan still contains a lot of good ideas worthy of the word “reform.”

Hawaii – Hawaii levies the fourth highest state and local taxes on the poor in the entire country, but some lawmakers would like to change that.  Proposals to enact an Earned Income Tax Credit (EITC) managed to pass both chambers of the legislature last year before eventually being abandoned, and lawmakers gave serious consideration to other low-income tax credit changes as well.  The Hawaii Appleseed Center’s recent report (PDF) on enhancing low-income tax credits, and options to pay for those enhancements, provides a wealth of information for the many lawmakers and advocates who intend to pick up where they left off last year.

Utah – Last year’s effort to improve Utah’s regressive tax system (PDF) by enacting an Earned Income Tax Credit (EITC) ultimately fell short, though a bill that would have created such a credit did make it out of the state’s House of Representatives.  That push will be resumed this year.

Is Tax Reform Coming to the District?

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This week the DC Council will be hearing tax reform recommendations from the experts they appointed to study the District’s tax system. While far from perfect, the DC Tax Revision Commission’s suggested changes include many sensible reforms. Here’s a quick overview of what’s being discussed.

The Commission recommends expanding the District’s Earned Income Tax Credit (EITC) for workers without children—the one group for whom this important anti-poverty and pro-work program currently provides little benefit.

Some middle-income taxpayers would benefit from lowering the middle tax bracket’s rate from 8.5 to 6.5 percent. And both lower- and middle-income families would benefit from a substantially increased personal exemption and standard deduction.

In order to partially fund these targeted low- and middle-income tax cuts, the Commission also recommends phasing out (PDF) the District’s personal exemption for high-income taxpayers, and making permanent the city’s temporary top tax bracket on incomes over $350,000 (albeit at a reduced rate).

And as with many tax reform efforts, the DC Commission’s plan also includes a long-overdue expansion of the District’s sales tax to include more personal services. Haircuts, tanning studios, car washes, and various other services (PDF) would finally be included in the sales tax base.

Among the more troubling aspects of the Commission’s plan is its price tag. The Commission wants to cut into the District’s revenues by $48.8 million, despite the fact that the DC Council only set aside $18 million to fund the Commission’s recommendations. And not all of the tax cuts contained in the Commission’s proposal are justified. A $15.8 million estate tax cut is unlikely to benefit (PDF) the District’s economy, and a $57 million corporate and business tax rate cut won’t do any good, either.

Against this backdrop, the Commission’s decision to recommend increasing the sales tax rate from 5.75 to 6 percent is an odd one. The $22 million in revenue raised by this regressive tax increase could easily be generated in a fairer way by scaling back the estate and corporate tax cuts, and/or by retaining the 8.95 percent rate on incomes over $350,000, as opposed to the lower 8.75 percent rate the Commission suggests.

Overall, the Commission’s proposal is a good starting point, but there’s still plenty of room for the DC Council to improve upon it before enacting any reforms into law.

IBM Paid 5.8 Percent Federal Income Tax Rate Over 5 Years

February 7, 2014 10:05 AM | | Bookmark and Share

Read this report in PDF.

International Business Machines (IBM) has paid U.S. corporate income taxes equal to just 5.8 percent of its $45.3 billion in U.S. profits over a five year period from 2008 through 2012. This finding is consistent with recent revelations by reporters Alex Barinka and Jesse Drucker of Bloomberg News that suggest IBM engages in gimmicks to make its U.S. profits appear (to the IRS) to be earned in low-tax or no-tax countries, in order to avoid federal corporate income taxes.[1]

While some analysts examine corporations’ worldwide taxes as a percentage of their worldwide profits, the figures above provide a more nuanced picture by isolating the U.S. corporate income taxes IBM has paid on its U.S. profits, and the foreign corporate income taxes IBM has paid on its foreign profits.

The figures are taken from the information IBM makes available to shareholders and the public by filing reports with the Securities and Exchange Commission (SEC). There is no reason to believe that the company is being dishonest in reporting to the SEC where it earned its profits and the amount of taxes it paid to the U.S. and to foreign governments.

For example, IBM reports that it had $51.0 billion in pretax profits in foreign countries over this five year period, and that it paid corporate income taxes to foreign governments equal to 26.8 percent of these profits. So, apparently, these profits were earned in countries where IBM has genuine business activities.

In the U.S., IBM reports $45.3 billion in pretax profits over this five year period and paid corporate income taxes of $2.6 billion, which is just 5.8 percent of its U.S. profits.

One possible explanation for IBM’s low effective U.S. income tax rate is that the company is telling the IRS something different about these U.S. profits than it tells its shareholders. For example, IBM may engage in accounting gimmicks to make most of its U.S. profits appear (to the IRS) to be earned in subsidiaries in Bermuda, the Cayman Islands or other countries that do not tax these profits. Of course, IBM does little or no real business in these countries and its subsidiaries there may be nothing more than post office boxes.  

This would mean that most of the U.S. profits that IBM reports to the SEC and its shareholders are escaping the U.S. corporate income tax, which would explain the low effective U.S. income tax rate.

One thing that is clear from these figures is that IBM pays higher corporate income taxes in the foreign countries where it does real business than it pays here in the U.S. on its U.S. earnings. This is true of most consistently profitable multinational corporations, and directly contradicts the claim by corporate lobbyists that corporate taxes must be reduced in order to make America “competitive.” IBM’s five year foreign effective tax rate of 26.8 percent is almost five times as high as its U.S. effective tax rate of only 5.8 percent.

The real problem with the U.S. corporate tax is that it allows a corporation like IBM to “defer” paying U.S. taxes on profits that it earns (or claims to earn) offshore until those profits are officially brought back to the U.S. (which may never happen). This provides an incentive for corporations to use accounting gimmicks to make their U.S. profits appear to be earned in offshore tax havens. This reduces the amount of revenue the federal government has to improve infrastructure, education, research, nutrition and other public investments that truly would make America more competitive.



[1] Alex Barinka and Jesse Drucker, “IBM Uses Dutch Tax Haven to Boost Profits as Sales Slide,” Feb. 3, 2014.

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Does the NFL Need a Billion Dollar Subsidy Annually from Taxpayers?

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Over the weeks leading up to the Super Bowl, the National Football League (NFL) has found itself increasingly under scrutiny for its extraordinary extraction of lavish tax breaks and subsidies from state and local governments throughout the country. In fact, one recent study estimated that the National Football League (NFL) receives as much as $1 billion in subsidies annually.

While state and local governments find themselves still struggling with austerity budgets, the NFL had revenues of $9 billion during 2013 and analysts expect its revenue to only rise in the years to come. In addition, the NFL’s overall profitability is rising and its operating margin is “head and shoulders above other sports.”

Given their lack of funds and the league’s high profits, why do state and local lawmakers feel the need to give extravagant subsidies to NFL teams? One of the main reasons is that NFL teams have frequently threatened to leave a given city if they do not receive the subsidies they want, typically for constructing or maintaining a stadium, and many lawmakers fear that voters will blame them for “losing” the team if they do ultimately move.

On top of this, proponents of the subsidies often produce studies purporting to show that the city or county’s economy will substantially benefit from the team and its stadium, even when accounting for the cost of the subsidies. According to Gregg Easterbrook, an expert on these deals, such claims simply do not “stand up to scrutiny.” The reality is that stadiums are a particularly poor economic investment because NFL teams only play about 8 regular season home games a year, whereas roads and bridges or even other businesses help the economy of a region all year round.

While many lawmakers are taken in by the arguments for the subsidies, the good news is that the general public now understands that subsidizing the NFL is simply not worth it in terms of “keeping” the teams or the economic benefits. In fact, a recent poll found that 71% of Americans opposed using tax breaks to attracts or keep a football team in town and 69% oppose the use of public funds to build and support stadiums for NFL teams.

On the federal level, there has been a lot of attention paid to a push by Senator Tom Coburn to remove the NFL’s (and other sports associations’) tax exempt status, which he claims allows the league to receive millions in unwarranted tax breaks. In truth, the tax exempt status only applies to the league’s organizing entity, which actually reported losses in recent years and is not currently being utilized as a “tax avoidance mechanism” according to tax experts.

Even if changing its status would cause the league to pay some additional taxes in the future, this amount will be a pittance compared to how much it receives in tax breaks from state and local governments, where the real tax avoidance is taking place.

State News Quick Hits: EITC Awareness, Grover Norquist’s New Target and More

Community organizations, state tax departments, and editorial pages across the country celebrated National EITC Awareness Day last Friday. Roughly 80% of those eligible for the federal Earned Income Tax Credit take advantage of it each year, a higher participation rate than most other social programs. But keeping this figure high — and ensuring that busy, working people are also aware of state and local EITCs they may qualify for — requires continued vigilance. One way to boost participation, and to save beneficiaries from wasting their refund on paid tax preparers, is by joining the volunteer income tax assistance (VITA) program. We also need anti-poverty advocates on the front lines fighting plans in some states to eliminate or weaken their state EITC, as North Carolina did last year.

Like many Americans, Grover Norquist is apparently sick of Congressional gridlock (despite having played no small part in causing it through his inflexible no-new-taxes pledge).  But rather than sit around while federal tax reform continues to stall, Grover has turned his sights toward Tennessee.  Grover wants to see Tennessee repeal one of the few bright spots of its staggeringly regressive tax system (PDF): its “Hall Tax” on investment income.  The Massachusetts native and current DC resident is signaling his intention to push lawmakers to repeal the tax, according to The Tennessean.

With an election just a few months away, Florida Governor Rick Scott has made clear that he wants tax cuts, yet again, to be a top priority in the Sunshine State.  His newest list of ideas includes cutting motor vehicle taxes, cutting sales taxes on commercial rent, cutting business taxes, and cutting business filing fees.  He’d also like to give shoppers a couple of sales tax holidays — a perennial favorite among politicians that like their tax cuts to be as high-profile as possible.

Check out the Kansas Center for Economic Growth’s new blog! Their latest post makes the salient point that two rounds of radical income tax cuts “have failed to create prosperity and are leaving low- and middle- income Kansas families struggling to make ends meet.”

Gas Tax Remains High on Many States’ Agendas for 2014

Note to Readers: This is the fourth installment of a five-part series on tax policy prospects in the states in 2014.  This series, written by the staff of the Institute on Taxation and Economic Policy (ITEP), highlights state proposals for “tax swaps,” tax cuts, and tax reforms.  This post focuses specifically on proposals to increase or reform state gasoline taxes.

Six states and the District of Columbia enacted long-overdue gas tax increases or reforms last year, despite the tough politics involved in raising the price drivers pay at the pump.  Will 2014 bring the same level of legislative activity on the gas tax?  Maybe not; but there are a number of states where the issue is receiving serious attention.

Delaware: Governor Jack Markell of Delaware is pushing for a 10 cent increase in his state’s gas tax, which hasn’t been raised in over 19 years.  The idea faces an uphill battle in the legislature, but without the increase the Delaware Department of Transportation’s capital budget will have to be slashed by about 33 percent next year.  Delaware’s House Minority leader would rather raid the state’s general fund budget (most of which goes toward education and health care) as opposed to addressing the state’s transportation revenue problems directly through reforming the gas tax.

Iowa: Governor Terry Branstad isn’t going to lead the fight for a gas tax increase, but he won’t veto one, either, if it makes it to his desk. Last week, an Iowa House subcommittee unanimously passed a 10 cent gas tax hike just a few hours before Branstad made clear his intention to remain on the sidelines during this important election-year tax debate.

Kentucky: Governor Steve Beshear wants to reverse a 1.5 cent gas tax cut that went into effect last month as a result of falling gas prices (Kentucky is one of eighteen states where the tax rate changes alongside either gas prices or inflation).  Doing so would raise about $45 million in additional funds to invest in the state’s transportation infrastructure.  And putting a “floor” on the gas tax to prevent further declines in the tax rate could avoid up to $100 million in funding cuts in the next two years.

New Hampshire: The chair of New Hampshire’s Senate Transportation Committee wants to raise the gas tax and index it to inflation.  The tax has been stuck at 18 cents per gallon for over twenty-two years, and the commissioner of the state’s Department of Transportation is optimistic that could finally change this year.  Governor Maggie Hassan hasn’t been a major player in the push for a higher gas tax, but it seems likely she would sign an increase if it made it to her desk.

Utah: Utah Senate President Wayne Niederhauser is rightly concerned about the fact that “more and more money is coming out of the state’s general fund for transportation,” and would like to reform the state’s gas tax to provide transportation with a sustainable revenue stream of its own.  Familiar concerns about not wanting to hike the gas tax in an election year have been raised, but Governor Gary Herbert seems to realize that some kind of change to the gas tax is needed.  To provide some context to this debate, we recently found that Utah’s gas tax is currently at an all-time low, after adjusting for inflation.

Washington: Last year’s unsuccessful push to raise the gas tax in Washington State has spilled over into the current legislative session.  Governor Jay Inslee still supports raising the tax, and House and Senate leaders have spent a significant amount of time trying to cobble together an acceptable compromise.

But while these six states are the most likely to act this year, they’re hardly the only places where the gas tax is generating a lot of interest.  In Oklahoma, both of the state’s largest newspapers have urged lawmakers to consider gas tax reform, as has the Oklahoma Policy Institute and the Oklahoma Academy.  In Minnesota, the commissioner of the Department of Transportation wants to see the gas tax rise on a yearly basis, and a coalition has been formed seeking more revenue for transportation.  The chairman of the South Carolina Senate Finance Committee supports a gas tax hike, as does the chair of New Mexico’s Transportation and Public Works Committee, some members of New Jersey’s legislature, and the editorial boards of both New Mexico’s and New Jersey’s largest newspapers.  And in Michigan, Governor Snyder’s laudable attempt to raise the gas tax last year has stalled, though it remains a topic of discussion in the Wolverine State.

Altogether, thirty-two states levy unsustainable flat-rate gas taxes, twenty-four states have gone a decade or more without raising their gas tax, and sixteen of those states have gone two decades or more without an increase.  With so many states reliant on outdated gas tax structures, there’s little doubt that reforming the tax will remain a major topic of discussion for the foreseeable future.

Photo via herzogbr Creative Commons Attribution License 2.0