Top 10 State Tax Trends #6: Tax Abolition
We’ve identified the top ten key tax trends among the states in recent years. We’re sharing them with a short report each weekday with data and analysis on each trend. We hope this information will help you learn how states responded to the recession, how they’re faring now, and how prepared they are for the future. The series kicked off last week with an overview of state budgets and state tax changes during 2011.
- No state has repealed a major tax since the elimination of Alaska’s income tax in 1980, but North Dakota, Oklahoma, Kansas, and Missouri all seek to either reduce or eliminate a major tax, according to a new analysis by the Tax Foundation.
- While supporters tout the economic gains in eliminating an entire category of taxation, the question of how a state’s budget will cope with the loss of a major source of revenue is crucial to the ongoing reform debate.
- Supported by a 44% increase in tax revenue spurred by oil production, North Dakota will vote next week on a proposal to abolish its property tax.
- Oklahoma looks to reduce its income tax to a flat tax rate, and ultimately eliminate it, relying on a reduction of government spending to balance the budget.
- Kansas sought to increase revenue by eliminating tax code loopholes, while also restructuring and reducing income tax rates. Legislators recently passed a significant income tax cut.
- Missouri aims to eliminate its income tax and supplement an increased, revenue-neutral sales tax for the lost revenue. The proposal will not appear on this year’s ballot but may return.
- If all proposals come to pass, an income tax-free zone could stretch from Texas north through Oklahoma and Kansas and east to Missouri.
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