Category: TaxJusticeBlog

On Monday, House Republicans released legislation that would repeal or modify many of the most significant portions of the Affordable Care Act (ACA). A central theme of the GOP plan is that it would significantly cut funding for low- and middle-income families’ health care, while eliminating the ACA’s expansion of Medicare taxes on the wealthiest taxpayers.

The ACA expanded the Medicare tax so that it currently applies not just to income from work, but also to most investment income received by high-income people. It also increased the Medicare tax rate on the highest income people from 2.9 percent to 3.8 percent. Repealing these ACA taxreforms would slash taxes on the super rich, while 98 percent of all taxpayers would see no tax change.

The most recent Internal Revenue Service (IRS) data show that in 2014 more than two-thirds of the Obamacare Medicare taxes were paid by individuals making more than $1 million. A third of the taxes were paid by individuals making more than $10 million. Repealing these taxes would give tax filers making more than $10 million dollars an average tax cut of more than half a million dollars a year.

Repeal would also be very expensive. According to estimates from the Joint Committee on Taxation, the repeal of the Medicare tax expansions would cost $275 billion over 10 years.

The House GOP proposal would also repeal a series of tax increases on health industry companies such as the medical device tax, a tax on health insurance providers and prescription drug makers. Altogether, the bill would repeal about $594 billion in tax increases.

At a time of growing income inequality, the House GOP is proposing to make things much worse by taking away critical healthcare coverage and support from low- and middle-income families and redistributing the savings from these cuts to pay for tax cuts for the wealthy and corporations. 

In the Tax Justice Digest we recap the latest reports, blog posts, and analyses from Citizens for Tax Justice and the Institute on Taxation and Economic Policy. Here’s a rundown of what we’ve been working on lately. 

Undocumented Immigrants’ Tax Contributions
ITEP today released updated numbers on undocumented immigrants’ tax contributions. Collectively, they contribute $11.74 billion in state and local taxes and pay an average effective state tax rate of 8.6 percent. This report is particularly important in the context of national policy discussion about a border wall and mass deportation.
Read the report

In a blog post about the report and current political climate, Meg Wiehe, ITEP director of programs, notes that undocumented immigrants have become an easy scapegoat for our rigged economic system, writing, “Erroneously blaming undocumented immigrants for stagnating wages and the growing chasm between the rich and poor detracts from the real issue: too many of our elected officials are responsible for tax and other public policies that favor special interests and corporations.”
Read Meg’s blog

A Tempered Delivery Doesn’t Make a Statement True
On Tuesday evening during his first address to Congress, President Trump promised to cut taxes for corporations and the middle class. For the latter to be true, the president would have to push a proposal that radically departs from his campaign trail tax plan, which would bestow 58 percent of its benefit on the richest 5 percent of taxpayers. While the speech was light on details, ITEP analyst Richard Phillips fact-checked this and three other statements on taxes.
Read more

What to Do When Continual Budget Shortfalls Become Exasperating?
Before the 2010 Tea Party wave, Kansas was governed by a bipartisan coalition of moderates. That wave ushered in Gov. Brownback and a series of supply-side tax cuts that devastated state revenues and gave the state the dubious distinction of poster child for failed trickle-down economic theories. Now, the bipartisan coalition of moderates is back and emboldened, and they mean business.
Read about the Kansas legislature’s recent vote to rescind tax cuts

What Is Combined Reporting and Why Should You Care?
Combined reporting requires large companies operating in multiple states to add together all the profits of their various branches and subsidiaries into one single report and then follow existing rules for apportioning those profits to states in which they operate. This is tax speak for making it more difficult for corporations to hide profits and dodge taxes.
Read a brief blog or
Read the full report 

What to Watch in the States: State-Federal Relationship Shifting
State lawmakers will be making policy decisions amid a great deal of uncertainty about the future of federal tax and funding policies that are crucial to the states. How those federal debates shake out and how states prepare for and react to them will have lasting consequences for families and businesses in every state, and for the very nature of federalism in the United States. 
Read more

If you have any feedback on the Digest or tax stories you’re watching that we should check out too please email me rphillips@itep.org

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For frequent updates find us on Twitter, Facebook, and at the Tax Justice blog.

A newly updated ITEP report released today provides data that helps dispute the erroneous idea espoused during President Trump’s address to Congress that undocumented immigrants aren’t paying their fair share. In fact, like all others living and working in the United States, undocumented immigrants are taxpayers. They collectively contribute an estimated $11.74 billion to state and local coffers each year via a combination of sales and excise, personal income, and property taxes, according to Undocumented Immigrants’ State and Local Tax Contributions.

As working Americans look to policymakers to address a rigged system in which wages for ordinary working people have stagnated while corporate profits and executive compensation have soared, some politicians have found an easy scapegoat in undocumented immigrants. Erroneously blaming them for stagnating wages and the growing chasm between the rich and poor detracts from the real problem: too many of our elected officials are responsible for tax and other public policies that favor special interests and corporations. Mass deportation won’t fix a rigged economic system.

Undocumented immigrants pay taxes. On average, the nation’s estimated 11 million undocumented immigrants pay 8 percent of their incomes in state and local taxes every year. In contrast, the richest 1 percent of taxpayers pay only 5.4 percent on average. Even though they pay a tax rate on par with many middle class citizens, undocumented immigrants are ineligible for many of the services that revenue supports.

Just as the horrendous impact of breaking up families under a mass deportation policy should not be ignored, nor should policymakers overlook the significant contributions undocumented immigrants make to our state and local revenues and the economy. It is overly simplistic and wrong to assume every job occupied by an undocumented worker would be readily taken by an American worker. This thinking ignores the reality of our workforce and broader economy. In addition to the disastrous nationwide business and economic impacts of a mass deportation policy, there would also be a tremendous shock to many state and local budgets without the tax contributions of undocumented immigrants.  

Most state and local taxes are collected from people regardless of citizenship status. Undocumented immigrants, like everyone else, pay sales and excise taxes when they purchase goods and services. They pay property taxes directly on their homes or indirectly as renters. And many undocumented immigrants also pay state income taxes.

ITEP’s data on undocumented immigrants’ tax contributions provides critical context at a time when the president is pushing policies and using language that unjustly demonizes our neighbors without legal status. This harmful ideology is reminiscent of other shameful examples of othering in American history. The U.S. has a record of targeting already vulnerable populations in times of crisis (Japanese internment camps during WWII and profiling Muslims post-911) and using malicious stereotypes (e.g. welfare queens and super predators) to unjustly scapegoat and marginalize communities of color.

Public policy—not people—by deliberate design has stacked the deck in favor of the elite and corporations. Castigating undocumented immigrants for our nation’s economic struggles plays into xenophobic and hateful ideology, and it won’t fix our rigged system. Public opinion polling shows that most of us know this and favor a path to citizenship for undocumented immigrants.

ITEP’s new report focuses on state and local taxes, but its findings mirror those at the federal level. Many undocumented immigrants pay federal payroll and income taxes as well as excise taxes on items such as fuel. A study from the Social Security Administration showed undocumented immigrants contributed $12 billion to the social security trust fund—and only drew down $1 billion from the fund. Full immigration reform at the federal level would decrease the deficit and generate more than $450 billion in additional federal revenue over the next decade, according to a 2010 report from the non-partisan Congressional Budget Office.

Immigrants without legal status contribute and help our communities thrive. When it comes to contributing their fair share to state and local revenues, they get the job done.

To view the full report or to find state-specific data, go to www.itep.org/immigration/.

Tax cuts have been proposed in many states already this year, but amid so much uncertainty, it remains to be seen how successful those efforts will be. This week saw one dangerous, largely regressive tax cut proposal move in Georgia, new budget proposals in Louisiana and New Jersey, a new plan to close West Virginia‘s budget gap, and cities in Alabama and Washington taking more matters into their own hands.

— Meg Wiehe, ITEP State Policy Director, @megwiehe  

• The Georgia House has advanced a regressive income tax bill that combines some promising features – a new nonrefundable state Earned Income Tax Credit and elimination of the state’s nonsensical deduction for state income taxes – with a flat tax rate that will predominantly benefit the highest-income Georgia residents.
• West Virginia Gov. Jim Justice proposed changes to the way in which he would close the state’s budget gap. New tax components include a 1-cent per ounce tax on sugar-sweetened beverages, 50-cent cigarette tax increase (bringing the tax/pack to $1.70), and a 0.25 percentage-point sales tax rate increase, expanding it to include professional services. The plan would also assess a surcharge between $500 and $1,000 for families with incomes over $200,000.
• Indiana lawmakers in the House passed a budget that includes a 10-cent increase to the fuel tax and a $1 increase to the cigarette tax. The budget is expected to be reworked in the Senate.
• Looking to raise more revenue to fund education, lawmakers in Utah continue to consider raising the sales tax on food from 1.75 percent to 4.7 percent. Advocates warn of the regressive impact this change would have without an offsetting tax change such as the enactment of a state EITC.
• Due to weak revenue collections and the state’s recent revenue failure, which will lead to cuts in essential state programs, S&P lowered Oklahoma‘s bond rating.
• How will Kentucky pay for pension reform? Lawmakers are considering taking up tax reform in special session, but say it would need to be revenue neutral to gain support.
• Alabama‘s window to update its gas taxes is “rapidly closing” due to the coming election year, according to The Anniston Star.
• Maryland lawmakers will attempt to close the “carried interest loophole” at the state level.
• A New Jersey legislative committee has advanced two bills to tax and regulate Airbnb and similar online marketplaces.
• Nebraska revenue forecasters revised their projection Monday, increasing the state’s revenue shortfall by $153 million.
• A bill to enforce collection of sales taxes owed on Mississippi purchases and devote the money to roads and bridges has been killed by Lt. Gov. Reeves.
• A campaign in Seattle is proposing a new strategy for testing the constitutionality of an income tax in Washington state—taxing unearned income for families with over $250,000 to “Trump proof” the city.
• Birmingham, Alabama is moving forward with a plan to give a rebate to its low-income residents to offset the state’s tax on groceries.

Budget Watch

• New Jersey Gov. Christie presented his final budget to legislators this week. The budget holds funding flat despite growing needs for K-12 schools and higher education, and it makes minor reductions to property tax relief programs despite a record-high average property tax bill in 2016. Christie’s proposal also relies on a narrow margin for error due to minimal reserves and assumed savings in public employee healthcare that have not yet been realized. He also suggested devoting state lottery proceeds to fill the pension funding gap.
• Louisiana Gov. John Bel Edward released his FY17-FY18 executive budget last week. The budget is short $440 million of what is needed to maintain existing year services and requires cuts to safety net hospitals and continued underfunding of the state’s higher education tuition program. 
• North Carolina Gov. Roy Cooper released his first budget (for FY17-19) this week.  While his proposal boosts public investments in education and other critical services, his policymaking was limited by the close to $2 billion in tax cuts enacted since 2013.  As the Director of the NC Budget and Tax Center notes, the spending level as a share of personal income proposed in the second year of his proposal is 17% below the state’s 45 year average.

Governors’ State of the State Addresses

• Most governors have now given their addresses for the year. The next scheduled address is Gov. Scott of Florida on March 7, followed by Gov. Kasich of Ohio on April 4, with Gov. Carney of Delaware and Gov. Cooper of North Carolina‘s speech dates still to be announced.

What We’re Reading…  

• Studies from three locales that have recently enacted taxes on sugary beverages show decreases in soda consumption.
• The Colorado Fiscal Institute explains why consumer purchases are not a realistic measure for changes in government spending.
• The DC Fiscal Policy Institute has released a new primer on where the district gets the revenue for its schools, public safety, and healthcare efforts.
• All signs suggest that the Bakken Shale boom has passed its peak, which will mean a need for careful budgeting and contingency planning in Montana and North Dakota.

If you like what you are seeing in the Rundown (or even if you don’t) please send any feedback or tips for future posts to Meg Wiehe at meg@itep.org. Click here to sign up to receive the Rundown via email. 

Despite some expectations that President Donald Trump would use his address to a joint session of Congress to lay out more details of his plan for tax legislation, the speech was extremely light on details. The few details mentioned were largely misleading or outright erroneous. Below we break down four tax-related statements from President Trump’s speech and lay out the full context of the issue discussed.

“Right now, American companies are taxed at one of the highest rates anywhere in the world. My economic team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone.”

In his first statement on tax issues, President Trump claimed that American companies face the highest tax rates in the world. The reality is that while the United States does have one of the highest statutory rates in the world, the corporate tax code is so full of tax loopholes that most companies pay nowhere near the 35 percent top tax rate. In fact, an analysis of data from economically developed countries found that the overall U.S. corporate tax level is below average compared to our key economic competitors. Another study by the Institute on Taxation and Economic Policy (ITEP) and Citizens for Tax Justice found that profitable Fortune 500 companies paid an average tax rate of just 19.4 percent, just over half the statutory rate, with many major companies paying nothing in taxes at all.

“At the same time, we will provide massive tax relief for the middle class.”

Returning to a frequent campaign theme, President Trump claimed that his tax and other economic policies would benefit the middle class. The reality is that President Trump’s previously proposed tax plans would do nothing like this. The detailed plan he released on the campaign trail last fall would bestow 58 percent of its benefit to the wealthiest 5 percent of taxpayers. A more accurate description of his tax cut plan is that it would provide the wealthy and corporations with a massive tax cut, while giving a cursory tax cut to almost everyone else. Furthermore, millions of low- and middle-income families could see their taxes rise under his plan given its changes to the lowest income tax brackets and changes to head of household rules.

“It’s a basic principle that those seeking to enter a country ought to be able to support themselves financially. Yet in America we do not enforce this rule, straining the very public resources that our poorest citizens rely upon.”

One of the major themes of President Trump’s address was his case for a crackdown on undocumented immigrants entering and currently residing in the United States. Trump claimed that undocumented immigrants strain public resources. One crucial fact that this description leaves out is undocumented immigrants pay a substantial amount in state and local taxes. According to a study by ITEP, undocumented immigrants collectively pay an estimated $11.6 billion in state and local taxes annually. Further, the study finds that undocumented immigrants on average pay 8 percent of their income in state and local taxes, which is on par with what the middle-income quintile pays in state and local taxes and higher than the 5.4 percent average rate paid by the top 1 percent of taxpayers.

“Currently, when we ship products out of America, many other countries make us pay very high tariffs and taxes, but when foreign companies ship their products into America, we charge them nothing or almost nothing.”

In one of the most muddled portions of the speech, President Trump made the case for some kind of border tax as retaliation against taxes he claims are unfairly placed on goods exported by the United States. Given his previous statements, one way to interpret it is that President Trump is continuing to wrongly argue that other countries discriminate against U.S. goods by applying their value added taxes (VATs) to U.S. goods. The problem with this statement is that VATs do not discriminate against U.S. goods because they apply equally to all goods imported or produced domestically in a given country. In addition, jurisdictions at the state and local level in the United States apply sales taxes in the exact same way, so under President Trump’s logic the U.S. already applies the same sort of tax onto foreign goods.

A second and potentially complementary way to interpret President Trump’s statement here is that he believes that U.S. goods face disproportionate tariffs throughout the world. The truth, however, is that the U.S. maintains a substantial schedule of tariffs against foreign products as well, meaning that any countries that apply tariffs to U.S. goods are certainly not doing so unilaterally.

So far in this series on tax policy topics to watch in 2017, we’ve covered important state debates in areas such as attempts to weaken or eliminate progressive taxes and needed updates to gas taxes and sales taxes. As if those topics weren’t enough to keep state lawmakers up at night, they will be making these decisions amid a great deal of uncertainty about the future of federal tax and funding policies that are crucial to the states. How those federal debates shake out, and how states prepare for and react to them, will have lasting consequences for families and businesses in every state, and for the very nature of federalism in the United States.

The first example of this is the very high likelihood of reduced federal funding for aid to states and for services such as health care, K-12 schools, and higher education that have historically been provided through a mix of local, state, and federal efforts. Many states are preparing two-year budgets right now with no clear idea of what to expect from Congress. For example, Governing has noted that states are underprepared for the ramifications of federal retrenchment in healthcare. Details are hazy but with leading federal budget proposals taking major cuts as a given – including the possible block-granting of Medicaid and other programs, repeal of the Affordable Care Act, and even completely eliminating the Department of Education – congressional representatives are sending the clear message that they intend to pull back drastically on their portion of those shared investments.

State leaders will have to decide whether they value their residents’ education, health, and safety enough to step up to these challenges as the federal government backs down from them. Stepping up will require replacing lost federal dollars with new state revenues, which will be particularly hard in states where legislators have been attempting for years to slash taxes and cut back on their share of these investments.

And that’s just the spending side of the federal budget. Federal tax changes could have serious impacts on the states as well.

Tax plans laid out by President Trump and congressional leadership include a number of provisions that could impact the states. Ending the deductibility of state and local taxes, creating a new deduction for child care expenses, changing the taxation of carried interest, altering expensing of business investments, and other corporate tax changes such as “border adjustment” could all have ripple effects on state revenue systems.

Another key example is the estate tax. In the 2000s, as federal tax cuts greatly weakened the federal estate tax and eliminated a credit for state estate taxes that was the basis for most such taxes, states had to decide whether to “decouple” from these changes and preserve their role in promoting equality of opportunity and resisting the growing influence of inherited wealth. Most states declined to act and today only 14 states and the District of Columbia have estate taxes. But in many of those states, a relationship between the state and federal tax estate tax codes remains, as exemption levels and other parameters often remain coupled to federal statute. Should Congress decide in the coming years to fully eliminate the federal estate tax or weaken it further, as both President Trump and congressional Republicans have indicated a desire to do, these states would again find themselves having to choose whether to passively accept such changes to their own tax codes or take action to establish a truly independent estate tax.

Similar “decoupling” questions could face states in respect to multiple other federal tax policies. One example to watch is federal treatment of capital gains interest and dividend income. Speaker Ryan has expressed a desire to exclude 50 percent of this income from federal Adjusted Gross Income (AGI), while another approach with a similar effect would be to simply reduce the tax rate on this income. However, if such a cut is enacted in the form of an exclusion from AGI, state revenues would suffer because many states use federal AGI as the starting point for their own income calculations. A rate cut would not ripple down to states in the same way. State lawmakers and advocates should watch such debates closely so they can either decouple from provisions where they are vulnerable to federal changes or encourage their federal representatives to reconsider the policies or adopt a different approach that does not harm the states. States with “rolling” conformity to the federal tax code could also consider switching to “fixed date” conformity to reduce their vulnerability to such changes.

Another approach some states are taking to proactively address some of these issues is to pass bills that automatically decouple from federal tax changes that significantly threaten state revenues. A thoughtful bill introduced in Nebraska, for example, preempts the adoption of any federal changes to the calculation of AGI that reduce Nebraska revenues by more than $5 million and requires a report to be produced on such changes so that lawmakers can make an informed and deliberate decision on whether to couple to the policy.

Other federal changes could increase revenues in some states. A few states still have an ill-advised state deduction for federal income taxes, which means that federal income tax cuts would reduce the size of that deduction and thereby increase state revenues. And if federal tax changes broaden the tax base by limiting itemized deductions, for example, states that couple to those income calculations will see revenue gains as well. In these cases, states may be tempted to “pass on” the benefit to their residents in the form of tax cuts, but it will be important for them to think twice about such tax cuts given the likely federal funding cuts summarized above and the need in many states to build up reserves before the next recession hits.

Before the tea party wave of 2010 that brought Gov. Sam Brownback to power and inspired the disappointing “real life experiment” in tax policy, Kansas was primarily governed by a moderate bipartisan coalition. One thing the last few weeks in the Kansas capital has clearly demonstrated is that this coalition is back and they mean business.

Five years after the legislature enacted the largest tax cut in Kansas history that has wreaked havoc on the state’s budget, the legislature voted to rescind many of these same tax policies—including eliminating the exemption for business pass-through income and adding back a third income tax bracket and higher marginal tax rates.

Like a captain committed to a sinking ship, Gov. Brownback vetoed the bill, to which the House promptly responded with an override—carrying one more vote than needed to do so. While the Senate’s override attempt fell three votes short, the session is far from over. A majority of lawmakers in both chambers voted for the initial legislation and then voted to override the veto. Building on this support, new tax bills have been filed in both chambers, including plans that only slightly vary from the bill that was vetoed (HB 2178). (A plan with lackluster support proposed by Gov. Brownback that would raise alcohol and tobacco taxes has also been filed but unlikely to get much traction.)

When lawmakers pick up the work again the week of March 6, expect to see another wave of efforts to eliminate the business pass-through exemption and to find agreeable adjustments to income tax brackets and rates. The resistance is underway. An improved tax policy will hopefully follow.

An important aspect of a 21st century tax code is ensuring that corporate income taxes are easy for corporations to follow, but not easy for them to avoid. As our newly updated policy brief on Combined Reporting of State Corporate Income Taxes explains, “combined reporting” remains an essential tool for states to achieve these goals. More than half of states with a corporate income tax now implement this common-sense policy to minimize corporate tax avoidance, and at least three more will consider adopting combined reporting this year. Moreover, most states that already require combined reporting can improve it further by taking the policy international through what is known as “worldwide combined reporting.”

Combined reporting works by requiring large companies operating in multiple states to add together all the profits of their various branches and subsidiaries into one single report and then follow existing rules for apportioning those profits to the states in which they operate. Requiring the combined report nullifies certain strategies some businesses use to avoid taxes, such as artificially shifting profits to certain states that tax corporate income at a lower rate or not at all. Because combined reporting renders such strategies pointless, it improves revenue performance of the tax assuring more help to fund services like transportation, education, and public safety, while also simplifying tax compliance for businesses, as they no longer have incentive to engage in behaviors such as creating spin-off companies in new states simply to avoid the taxes they owe.

New Mexico, which has been considering bills to implement combined reporting for more than ten years, will have another chance to take this step to modernize its tax code this year. Pennsylvania’s Gov. Tom Wolf included the policy in his budget proposal earlier this month. And Alabama legislators are making a concerted push to adopt combined reporting as well. As our policy brief explains, these states and others can benefit from combined reporting, and states that have already taken this crucial step can consider additional measures to beef up their defenses against corporate tax avoidance strategies.

In the Tax Justice Digest we recap the latest reports, blog posts, and analyses from Citizens for Tax Justice and the Institute on Taxation and Economic Policy. Here’s a rundown of what we’ve been working on lately. 

Regressive and Loophole-Ridden: Issues with the House GOP Border Adjustment Tax Proposal
In recent weeks, the Republican congressional leadership’s effort to introduce a comprehensive tax reform bill has increasingly faced opposition from major business groups and skeptical lawmakers from across the aisle. The primary source of dissent thus far is that the most prominent tax framework, the House GOP’s “Better Way” tax blueprint, contains a radical provision to apply a border adjustment to pay for a cut in the corporate income tax rate from 35 to 20 percent. A new report from the Institute on Taxation and Economic Policy (ITEP) finds that this border adjustment tax would be regressive and loophole-ridden and would likely violate international trade agreements.
Read the Report
Read the Summary Blog Post

Private School Tax Subsidies Blur the Line Between Charitable Gift and Money Laundering
When is a charitable contribution not a “donation” at all? If a taxpayer manages to turn a profit on the deal, has anything altruistic actually occurred? The clear answer is no. But an ITEP report reveals that the federal government does not always agree, at least with regard to certain gifts to private K-12 scholarship funds. Released late last year, the report’s findings may gain renewed public interest because the newly confirmed Education Secretary, Betsy DeVos, is a proponent of using public dollars for private school education and President Trump, according to reports, is considering a policy that would funnel federal dollars to private schools via federal income tax credits.
Read the Report
Read the Updated Blog Post

What to Watch in the States: Modernizing Sales Taxes for a 21st Century Economy
State lawmakers often find themselves looking for ways to raise revenue to fund vital public services, fill budget gaps, or pay for the elimination or weakening of progressive taxes. Lately, that search has led many states to consider reforming or expanding their sales taxes.
Read the Blog Post

Why, West Virginia, Why?
A recently introduced Senate Bill in West Virginia (SB 335) would ultimately eliminate the state’s personal and corporate income taxes, do away with the sales and use tax, and reduce the state’s severance tax. Under the plan, the revenue lost from this assortment of diverse taxes would be replaced by an 8 percent broad-based general consumption tax. The result: low- and middle-income West Virginians pay more, much more, while wealthy residents heavily benefit.
Read the Blog Post

‘IMPROVE’ Act Fails to Improve Tennessee’s Regressive Tax Code
Tennessee Gov. Bill Haslam’s proposal (dubbed the IMPROVE Act) to raise the state’s gas tax while cutting three other taxes would essentially be a tax cut for the state’s wealthiest residents and a tax increase for the lowest-income Tennesseans.
Read the Blog Post

ITEP State Rundown: Regressive Tax Proposals Multiplying
This week saw a nearly successful attempt to right the fiscal ship in Kansas; regressive tax proposals introduced in West Virginia, Georgia, and Missouri; ongoing gas tax fights in Indiana, South Carolina, and Tennessee; and further tax and budget wrangling in Illinois, New Mexico, Oklahoma, and beyond.
Read the full Rundown
 

If you have any feedback on the Digest or tax stories you’re watching that we should check out too please email me rphillips@itep.org

For frequent updates find us on Twitter, Facebook, and at the Tax Justice blog.

A recently introduced Senate Bill in West Virginia (SB 335) would ultimately eliminate the state’s personal and corporate income taxes, do away with the sales and use tax, and reduce the state’s severance tax. Under the plan, the revenue lost from this assortment of diverse taxes would be replaced by an 8 percent broad-based general consumption tax.

The result: low- and middle-income West Virginians pay more, much more, while wealthy residents heavily benefit.

In analyzing key components of the proposal, we found the plan to be highly regressive. On average, West Virginians earning less than $84,000 will pay more while those in the top 1% would receive an average tax cut of nearly $28,000.

*This analysis assumes a revenue neutral proposal.

For additional detail on the proposal and what it would mean for West Virginia, visit the West Virginia Center on Budget and Policy’s presentation before the Senate Select Committee and their detailed write-up of the impact.