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Progressive Revenue Measures Approved or Moving in Oregon and Other States
Nathan Newman on June 25, 2009 - 11:02am
Oregon became the latest state to address the current fiscal crisis with progressive revenue increases. This is part of a welcome trend that we highlighted back in April of states recognizing that budget cuts need to be balanced with wealthier state residents being asked to pay their fair share to address the effects of the economic downturn.
The Oregon legislature approved the creation of two new temporary top income tax brackets with rates of 10.8 and 11 percent and increases in the state's corporate minimum tax (which had not been raised since 1931). The tax increases for corporations and individuals and couples making more than $250,000 per year will yield $700 million in additional revenue.
Oregon's action follows New York and Hawaii, who approved similar income tax increases on wealthier earners this year, as did the Minnesota legislature (whose bill was vetoed by Minnesota Governor Pawlenty). Other states have also taken action or are moving in that direction to raise necessary revenue in a progressive manner:
- New Jersey is debating a budget that includes $1 billion in income tax increases on the wealthy, with rates increasing from 6.37 percent to 8 percent on household income between $400,000 and $500,000, from 8.97 percent to 10.25 percent for income between $500,000 and $1 million, and from 8.97 percent to 10.75 percent on income over $1 million.
- The Connecticut legislature is proposing income tax increases on joint filers making more than $500,000 per year (although they face a veto threat from the governor).
- The Rhode Island House released a budget this past week that would eliminate the preferential treatment of capital gains in that state, thereby treating such income the same as wages.
- Wisconsin is debating a number of major progressive tax proposals, with the state Assembly approving raising income taxes on individuals earning more than $225,000 and households making more than $300,000 a year, while both chambers have approved cutting back on preferential treatment of capital gains income.
- Pennsylvania Governor Ed Rendell indicated that he would support increasing the state's personal income tax rate from 3.07 to 3.57 percent.
- The North Carolina House budget calls for a combination of sales tax increases along with higher income taxes on couples making more than $200,000 a year.
- Colorado ended taxpayers’ ability to deduct capital gains income derived from assets or businesses located within the state.
- Delaware's House budget currently being debated calls for the restoration of the state inheritance tax and an increase from 5.55 percent to 5.95 percent on taxable income from $50,000 to $60,000, from 5.95 percent to 6.95 percent on income from $60,000 to $150,000, and from 5.95 percent to 7.45 percent on income exceeding $150,000.
- Washington, D.C. Councilman Jim Graham has proposed raising the top tax rate in the District to 8.9 percent, but only for those taxpayers with incomes above $500,000.
As we detailed in April, such tax increases are sound economic policy and help prevent devastating budget cuts that would undermine future growth. Overall, at least twenty-three states have enacted tax increases of some kind this session and another thirteen are considering it (see map courtesy of the Center on Budget and Policy Priorities).
Progressive States Network - Taxing High-Income Residents: Better than Budget Cuts, Better for Economic Growth
Citizens for Tax Justice - The Tax Justice Digest
Center for Budget and Policy Priorities - Tax Measures Help Balance State Budgets: A Common and Reasonable Response to Shortfalls