Today, the American Legislative Exchange Council released a report on state taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. action in 2013, where they identify 18 states that enacted tax cuts this year. They find that 45 percent of tax cuts occurred in the individual and corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. categories, which are generally found by economists to be the most destructive to economic growth.
Here’s the breakdown of tax changes:
The report includes detailed explanations of the major, headline-grabbing beneficial reforms in states like North Carolina, Indiana, and Texas, but also includes some stories you might have missed this year. As an example, Florida passed a bill to exempt manufacturing equipment from their sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. , which is good policy because it reduces sales tax pyramiding. Idaho also raised the exemption of their business personal property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. , which is an often overlooked class of tax that problematically disincentivizes investment in new innovative technologies and machinery.
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