President Obama recently gave a lengthy speech on inequality, poverty, and what to do about it. He claimed inequality is increasing, which is debatable, and then offered a few populist ways to reduce it, such as raising...
- State Budget Shortfalls Present a Tax Reform Opportunity
State Budget Shortfalls Present a Tax Reform Opportunity
Special Report No. 164
• Forty-five states face budget shortfalls of varying degrees, totaling approximately $132 billion through fiscal year 2010. However, every state but one expects revenues in 2010 to be higher than in 2006, and all but nine states have seen revenues grow faster than inflation from fiscal years 2006 to 2009.
• States hit hardest are those that relied most heavily on growth in unstable revenue sources like taxes on capital gains, high-income earners, and corporate profits.
• Punitive taxes on unpopular groups, such as smokers, drinkers, or high-income earners, are poor tax policy and a source of instability because they force a small group of people to pay for government services broadly available to all citizens. Shifting the burden of paying for these programs away from most taxpayers can result in demands for more government than people are actually willing to pay for.
• State and local officials are more frequently using the "Washington Monument" ploy-threatening to cut politically popular services to create pressure for tax increases.
• Broadening tax bases, lowering rates, and eliminating targeted tax credits can generate extra revenue without unduly harming a state's economic performance.
Note: This is not the most recent version of this publication. See the 2014 Index here.
Download a full PDF of the study...
Tax Foundation Fiscal Fact No. 283
On September 8th, 2011, President Obama proposed the $447 billion American Jobs Act (AJA) to a joint session of Congress. The AJA includes more than...
Join the Tax Foundation's fight for sound tax policy Go
Tax Policy Blog
The official weblog of the Tax Foundation.
Tax By State
For information on your state, select it from the drop-down menu.
Ask a Tax Expert
Contact information for Tax Foundation policy staff Ask