The individual income tax is one of the most significant sources of revenue for state and local governments. In fiscal year (FY) 2016, the most recent year of data available, individual income taxes generated 23.5 percent of state and local tax collections, just less than general sales taxes (23.6 percent). The map below shows combined
In New York, Governor Andrew Cuomo (D) is staring down a $2.3 billion shortfall, and he thinks he’s identified the culprit: the state and local tax (SALT) deduction cap. It’s a politically convenient scapegoat, but it misses the point—and more importantly, it misses an opportunity to improve the state’s uncompetitive tax code. Once a skeptic
Key Findings Gross receipts taxes, also known as “turnover taxes,” have returned as a revenue option for policymakers after being dismissed for decades as inefficient and unsound tax policy. Their appeal comes as many states are looking to replace revenue lost by eroding corporate income tax bases and as a way to limit revenue volatility.
Lawmakers have recently announced plans that would increase the tax burden on wealthy Americans, ranging from higher marginal income tax rates to wealth taxes. These proposals are flawed in several ways, including in their lack of understanding of tax history. While marginal income tax rates have come down from their highs of 91 and 92
Key Findings Forty-five states and the District of Columbia collect statewide sales taxes. Local sales taxes are collected in 38 states. In some cases, they can rival or even exceed state rates. The five states with the highest average combined state and local sales tax rates are Tennessee (9.47 percent), Louisiana (9.45 percent), Arkansas (9.43
The new federal tax on Global Intangible Low-Taxed Income (GILTI) is something of a misnomer: it’s certainly global and it’s definitely income, but the rest of it is, at best, an approximation. It’s not exclusively levied on low-taxed income, nor just on the economic returns from intangible property. So what is GILTI, why might states
Bill Bradley did not like sports betting. The former New York Knicks star forward felt it sent the wrong message to young athletes and undermined the integrity of the game. So when Bradley transitioned from the basketball court to the U.S. Senate, he championed a nationwide ban on sports betting. It was not, perhaps, the
The Institute on Taxation and Economic Policy is out today with a report recommending how states should approach taxing legalized marijuana. It’s a topic we’ve written about extensively, and based on that research, we have some concerns with the report’s suggestion that states tax marijuana based on the weight of the amount sold rather than
State sales tax bases have two key areas in need of improvement: in some ways, they are too narrow, and in other ways, they are too broad. State sales tax bases have narrowed over time as new exemptions have been created, such as exemptions for groceries and prescription drugs. Another factor contributing to the shrinking
The Virginia General Assembly, the New World’s oldest continuous lawmaking body, began its 400th year amid pageantry and an unintended tax increase on which, thus far, that body has had no say. The House’s ceremonial mace, a symbol of the legislature’s prerogative, was escorted into the chamber by a company of pikemen in colonial garb.
The Arkansas Tax Reform and Relief Task Force concluded its work earlier this month, referring several tax changes to the General Assembly for its consideration in January when the legislative session begins. Amidst the flurry of activity, it’s difficult for everyday Arkansans to know how these tax reforms will impact their budget and their tax
This week’s state tax map examines states that have a throwback rule in their corporate tax code. Throwback rules are not widely understood, but they have a notable impact on business location and investment decisions. For purposes of corporate taxation, multistate businesses are required to apportion their income among the states in which they operate.
Voters in San Francisco adopted Proposition C earlier this month, adding another gross receipts tax to the city’s businesses. It is a particularly pernicious form of taxation enjoying a resurgence at the state and local levels, leaving San Francisco about to face a legal quagmire that threatens to halt the tax’s enactment. Proposition C introduces
Unfortunately, Chicago’s poorly-designed “Netflix tax” is still alive and kicking. In 2015, Chicago’s Department of Finance determined that its 9 percent amusement tax applied to streaming services, such as Netflix, Spotify, and Hulu. This interpretation has been challenged in court, but as Bloomberg Tax recently reported, Sony has voluntarily agreed to collect the tax for
Under the federal individual alternative minimum tax (AMT), many taxpayers are required to calculate their income tax liability under two different systems and pay the higher amount. Established in 1969, the federal AMT was created when Congress discovered that 155 high-income taxpayers were eligible to claim so many deductions that they ended up with no
This year, “Cyber Monday” signifies more than just a chance to get the best post-Black Friday deals. It also kicks off the first holiday online shopping season since the U.S. Supreme Court sales tax ruling in South Dakota v. Wayfair. It’s a big step but also doesn’t represent a huge sea change, given the evolution
Like the federal income tax, 33 states and the District of Columbia have a graduated-rate state individual income tax, with tax rates that get progressively higher with increases in income. However, significant variation exists among states in both the number of tax brackets and the income threshold at which the top tax rate kicks in.
Today’s map examines states that have a “marriage penalty” in their individual income tax brackets. Under a progressive, graduated-rate income tax system, as a taxpayer’s marginal income increases, tax rates also increase. A marriage penalty exists when a state’s income brackets for married taxpayers filing jointly are less than double the bracket widths that apply
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Today’s map is the final in our series examining each of the five major components of the 2019 State Business Tax Climate Index. Compared to individual, corporate, sales, and property taxes, unemployment insurance (UI) taxes are less widely understood but have important implications for the business climate in a state. A state’s performance on the