Healthy State Economies Need the Progressive Income Tax: New Policy Brief

State revenues remain low, and there are historic, structural reasons for this as well as more short term reasons, including the recession. It is increasingly clear that states can no longer afford the tax-cutting agenda that politicians of all ideological stripes have promoted, which includes targeting the progressive, personal income tax.

The Institute on Taxation and Economic Policy (ITEP) continually combats the flawed logic and cherry picked data put out by Arthur Laffer and other “experts” who claim that income taxes stifle economic growth and must therefore be reduced.  ITEP’s latest effort to set the record straight is a concise new policy brief (PDF), The Progressive Income Tax: An Essential Element of Fair and Sustainable State Tax Systems.  It makes the case that in reality, “Not only do [income] taxes not harm economic growth, but the vital public investments that they make possible actually pave the way for better state economies.”  The income tax has an important role to play in tax fairness as well because it’s the only tax available to states that can meaningfully mitigate the unfairness of sales, excise, and property taxes, which take a larger bite out of working families’ budgets than from wealthier households. Read ITEP’s latest brief here (PDF).