We retired Tax Justice Blog in April 2017. For new content on issues related to tax justice, go to www.justtaxesblog.org
Our partner organization, the Institute on Taxation and Economic Policy (ITEP) is continuing to generate a lot of publicity in the states for its recent Who Pays? report examining the fairness (or lack thereof) of every state’s tax system. The Tennessean explains, for example, that: “Tennessee is often championed as a low-tax state. But for struggling families, it might not be among the fairest.”
In Pennsylvania, meanwhile, Sharon Ward of the Pennsylvania Budget and Policy Center explained ITEP’s report to CBS Philly by saying that: “We are in a club we don’t want to be in — one of the ‘Terrible Ten States’ that has the most regressive tax systems. And really, we got here for a very important reason: we have a flat income tax that fails to offset the more regressive taxes: sales and property taxes.”
And in Wyoming, the Equality State Policy Center (ESPC) is using ITEP’s new Who Pays? data to make the case for enacting a state Earned Income Tax Credit (EITC). ESPC explains that the credit could make a long-overdue increase in the state’s gasoline tax much fairer by mitigating its impact on low-income families.
We recently profiled the four states looking most seriously at “tax swaps” that would offset big income tax cuts with a regressive sales tax hike — Kansas, Louisiana, Nebraska, and North Carolina. New Mexico can now be added to that list. Two lawmakers there say they would like to expand the sales tax to apply to “virtually everything that happens” in the state and then repeal the personal and corporate income taxes. But economists in New Mexico say that the plan is “pretty much guaranteed to be regressive and shift the tax burden.”
Bipartisan legislation in Texas would remedy the state’s “astounding deficit of knowledge when it comes to tax expenditures” — or special tax breaks (PDF). The report proposes a number of smart reforms recommended by ITEP. Those reforms include rigorous reviews aimed at determining whether tax breaks have fulfilled their goals, and “sunset provisions” designed to force a vote on special tax breaks that would otherwise continue on autopilot for years or decades on end.