State News Quick Hits: Tax Break Chaos in Georgia, Taxing the Poor in the Southwest, and More

Need further proof that the poor are often taxed more heavily than wealthier folks? Take a look at this recent New York Times piece by sociologist Katherine Newman based on her book. She writes that “tax policy is particularly regressive in the South and West, and more progressive in the Northeast and Midwest. When it comes to state and local taxation, we are not one nation under God. In 2008, the difference between a working mother in Mississippi and one in Vermont — each with two dependent children, poverty-level wages and identical spending patterns — was $2,300.” Newman concludes with suggestions for offsetting the regressive impact of state taxes.

The Atlanta Journal Constitution is doing an investigative series on tax breaks and incentives, and here’s their latest article – a look into “the Georgia Agricultural Tax exemption program, [designed] to allow farmers and companies that produce $2,500 in agricultural services or products a year to receive sales tax breaks on equipment and production purchases.” What they found, however, is that construction firms, mineral companies, horse ranches and even dog kennels have applied for the breaks, along with hundreds of out-of-state businesses, with addresses as far afield as Texas and Colorado.” The newspaper found very few requests for this tax break were being rejected, and the governor is imploring businesses to police themselves. The newspaper concludes that it was the absence of clear criteria and lack of resources for screening and evaluating applications that’s resulted in the fiscal and logistical chaos.

Washington State lawmakers are trying to get a better handle on the numerous special tax breaks (PDF) being added to the state’s tax code every year. Under a bill that passed the state senate unanimously, new tax breaks would have to include a statement of purpose against which to judge their subsequent success, and an expiration date that would force lawmakers to vote on them again after a certain number of years.  Both of those reforms (along with others) have been recommended by our partner organization, the Institute on Taxation and Economic Policy (ITEP).

Massachusetts Governor Deval Patrick cited a recent report from ITEP’s “Debunking Laffer” series while testifying in favor of his proposed income tax increase: “Last month, the non-partisan Institute on Taxation and Economic Policy issued a report evaluating the economic growth per capita of several states. The report compared nine states with relatively high income taxes to nine states with low or no income tax. The analysis made clear that the nine states with “higher” income taxes actually saw considerably more economic growth per capita than the nine states with low or no income tax. The states with no income tax have seen a decline in median income.”