Levied in thousands of cities, counties, school districts, and other localities, local income taxes are often used to either lower other taxes (like property taxes) or raise more revenue for local services. While they may make sense on paper, local income taxes come with more challenges than other local revenue sources.
Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections:
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Immediately balancing the $20 trillion budget shortfall would take drastic, unwanted policy changes. Instead, lawmakers should target a more achievable goal, such as stabilizing debt and deficits with an eye toward comprehensive tax reform that can produce sufficient revenue with minimal economic harm.
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While hoping for inflation’s continued decline, policymakers should finish the job and index the tax code to prepare for future bouts of high inflation and as a contingency in case it takes longer to defeat elevated inflation than expected.
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Despite robust revenues, some state lawmakers are champing at the bit to raise taxes on higher-income households, sometimes to extraordinary levels.
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When peeling back layers of the JCT report, it becomes clear that many tax expenditures are not “loopholes” or benefits for narrow special interests, but important structural elements of the tax code.
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President Biden shared his policy aspirations during the State of the Union address, outlining three tax proposals in his remarks: quadrupling the brand-new excise tax on stock buybacks, instituting a “billionaire minimum tax,” and extending the now-lapsed expanded Child Tax Credit. We discuss the prospects of major tax changes becoming law in a divided government and what these proposals signal about how President Biden thinks about tax policy as he enters the latter half of his first term.
If your state issued tax rebates last year, you might have to pay federal income tax on the rebate you received. Maybe. Who knows? Unfortunately, not the IRS—at least not yet.
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President Biden’s State of the Union Address outlined three tax proposals, including raising the tax on stock buybacks, imposing a billionaire minimum tax, and expanding the child tax credit.
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A new tax expenditures report by the Joint Committee on Taxation (JCT) reveals two problematic developments: 1) policymakers have increasingly relied on the tax code to deliver benefits to individuals, and 2) the broad, neutral tax treatment of investment has shifted to targeted subsidies for businesses.
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While many factors influence business location and investment decisions, sales taxes are something within policymakers’ control that can have immediate impacts.
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Forty-three states adopted tax relief in 2021 or 2022—often in both years—and of those, 21 cut state income tax rates. It’s been a remarkable trend, driven by robust state revenues and an increasingly competitive tax environment.
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At the end of 2022, prices were 14.6 percent higher than they were two years prior. That’s the fastest inflation rate over any two calendar years since the stagflation era of the late 1970s. State policymakers are understandably interested in bringing any tools at their disposal to bear on the problem. And many of them are reaching for tax policy solutions.
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The latest IRS data shows that the U.S. federal individual income tax continued to be progressive, borne primarily by the highest income earners.
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Since 2021, 43 states have provided substantial tax relief for taxpayers and businesses. But this year, a new trend has emerged in the opposite direction: a push for states to tax investment. Jared Walczak joins Jesse to discuss how wealth tax proposals to higher capital gains income taxes would affect investment, job creation, and migration between states—and why they’re happening now.
The FairTax is a proposal to replace all major sources of the federal government’s revenue—the individual income tax, corporate income tax, estate and gift taxes, and payroll tax—with a national sales tax and rebate, abolishing the IRS in the process.
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Earlier this month, New York Governor Kathy Hochul (D) proposed increasing the state’s cigarette tax rate by $1.00 a pack, banning the sale of flavored vaping products, and ceasing the sale of all flavored tobacco products. If enacted, these policies would fuel black markets and create a fiscal hole for the state to fill, all while hurting New York businesses and consumers.
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West Virginia is one of only seven states that hasn’t offered any significant tax relief since 2021—and five of the other six forgo an individual income tax.
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On the heels of adopting one of the most comprehensive state tax reform packages in years, Iowa lawmakers are back in Des Moines with property tax relief in their sights. But while the issue is worthy of their attention, House File 1 (HF 1) as currently drafted misses the mark.
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Before EU policymakers rush to implement massive reforms, they should remember the goals of the Single Market, its international limitations, and the role of tax policy.
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