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This week we are bringing you news about the unfortunate similarities between the failed tax cut experiment in Kansas and the president-elect’s tax proposal, the potential for another Laffer-led tax overhaul (this time in Kentucky), a promising progressive tax proposal out of Montana, and more dire budget news out of Oklahoma, New York and Pennsylvania.

— Meg Wiehe, ITEP State Policy Director, @megwiehe

  • An article in the Wichita Eagle this week explains the similarities between President-elect Donald Trump’s tax plan and the disastrous tax changes enacted in the state under Gov.Sam Brownback. In particular, Brownback’s tax changes and Trump’s proposal largely benefit wealthy households and are justified by “trickle-down” economics, a worn out and disproven ideology pushed by Arthur Laffer that tax cuts will pay for themselves.  This has certainly not been the case in Kansas.  In fact, a growing number of Kansas lawmakers plan to undo the Brownback tax cuts next year.
  • Arthur Laffer is pushing a “new agenda” in Kentucky. He and associates contributed heavily to the state’s key House races this month. The new majority has emboldened Gov. Matt Bevin’s commitment to tax reform in 2017. Kentuckians cannot afford to go down the road of Kansas’ failed experiment with Laffer-backed supply-side and trickle-down tax cuts.
  • Arkansas Gov. Asa Hutchinson plans to ask lawmakers to enact a $50 million tax cut that would focus on lower- and higher-income brackets. Details of the proposed cut will be released in advance of the 2017 legislative session. The state is $23 million behind forecasted revenue for the current fiscal year.
  • Newly re-elected Montana Gov. Steve Bullock released his budget plan yesterday, which included several revenue measures such as adding a new top bracket for incomes over $500,000; limiting the capital gains tax credit; enacting a state Earned Income Tax Credit (EITC); and taxing medical marijuana. The new revenues are intended to help bolster lagging energy revenues, fund an infrastructure package, shore up the rainy day fund, and fund job training and preschool initiatives.
  • Four Mississippi state senators are mounting an attempt to repeal the destructive tax cut passed there earlier this year. Their plan would devote the revenue to roads and infrastructure. They may have a hard time building support for that effort, considering members of the legislative committee formed to study the state’s tax code support the cuts and experts informing the work have suggested speeding up their implementation.

  • Oklahoma lawmakers admitted today that the recent funding cuts to higher education, down nearly 16 percent from the previous year, were done in anticipation of a ballot measure to fund education initiatives. State question 779, that would have increased the sales tax by one percent, was defeated at the polls, leaving the state’s education system to pay.

  • In its mid-year budget analysis, New York’s Budget Division reports that the state’s personal income tax collections “continued to be disappointing,” resulting in budget gaps in this and coming years. Projected gaps are due in part to the planned elimination of the state’s top personal income tax rate and the recent multi-year “middle-class” income tax cuts for joint filers making up to $300,000.

  • Pennsylvania‘s Independent Fiscal Office reports a $1.7 billion structural deficit for the coming fiscal year that is expected to continue to grow. It is yet to be seen whether state lawmakers will raise necessary revenue through sustainable broad-based changes, or continue to kick the can down the road by relying on gimmicks, one-time fixes, and spending cuts.

  • S&P downgraded New Jersey’s credit rating this week, the third of the three major ratings agencies to do so recently in response to the state putting a massive hole in its budget this year with a harmful, regressive package of tax cuts. This marks the tenth time the state’s ratings have been downgraded under Gov. Christie, the most for any governor in history.

What We’re Reading…

  • National Council of La Raza released a fact sheet on how EITC expansion will benefit Latinos.

  • The Economic Policy Institute released a new report this week on the need for progressive revenue increases to help meet the nation’s fiscal challenges.

  • The Council of State Governments has a new report out looking at the impact of the aging population on state revenues.

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.