More States Considering Practical, Popular Measures to Deal with Budgets


Following up on Illinois lawmakers' successful effort to raise personal and corporate income taxes earlier this year, other states are considering sound proposals to generate revenue even as the right wing continues to advocate irresponsible slash-and-burn fiscal policies.

In Connecticut, for instance, Gov. Dannel Malloy proposed revenue generation as a part of the response to the state's $3.7 billion shortfall. The Governor's plan would expand the number of tax brackets and raise the top rate on the highest income earners to 6.7 percent. Gov. Malloy's proposal would additionally expand the sales tax base to include several services and reform corporate income taxation in the state. Minnesota Gov. Mark Dayton has also introduced a plan to raise sorely-needed revenue, including adding a new top income tax bracket and charging an additional surtax on individuals with income over $500,000. These reforms would only impact the richest 5 percent of the state. Governors in Hawaii and North Carolina have prioritized similar progressive measures to address shortfalls.

Progressive tax reform is critical to address weak state fiscal climates, lessen the burden on the middle class in a time of economic hardship, and raise funds to invest in public structures that are vital to our economic well-being. Furthermore, as the Institute for Taxation and Economic Policy details in their recent publication, The ITEP Guide to Fair State and Local Taxes, a comprehensive examination of salient issues in state and local tax policy and sound methods to alleviate fiscal pressures, "the need for tax reform is now greater than ever. State and local taxes in almost every state are regressive."

In 2008 and 2009, over 30 states increased taxes to alleviate fiscal pressures due to the recession. As the Center on Budget and Policy Priorities indicates, this parallels a general trend of states increasing revenue during recent economic downturns. These policies stand in bold contrast to the slew of regressive proposals, outrageous cuts to vital programs, and the egregious assault on workers' rights and the middle class that many right-wing governors have advanced.

The public favors these efforts as well. Both national and state-based polls indicate overwhelming support for taxing millionaires over cutting services as a means to confront budget shortfalls. A February 2011 Wall Street Journal/NBC poll found that nationally, 81 percent of respondents thought "placing a surtax on federal income taxes for people earning over one million dollars a year" was totally or mostly acceptable as a way to reduce the budget deficit. The same poll indicated that 68 percent supported "phasing out the Bush tax cuts for families earning two hundred and fifty thousand dollars or more per year" in response to the same prompt.

A poll conducted this month in NewYork demonstrates similar public desire for enactment of progressive tax reform. While New York's Governor does not support extending a temporary income tax surcharge on the richest of the state that was enacted in 2009, 64 percent of voters believe that would be the appropriate course of action to take.

Even some conservatives have defied partisan allegiance to acknowledge the vital role taxes play in supporting communities and local economies. In South Dakota, the Republican Senate President Pro Tempore, Bob Gray, supports the idea of having a special election in November to raise taxes, which is in clear defiance to the Governor's intention to balance the budget without new taxes. Senator Gray explained, "the people get to decide. If they say, 'You know what, we want to pay a little more because we can't stand the idea of cutting our schools, cutting our nursing homes,' they can do that."

Accordingly, targeted progressive tax reform is popular with the public, politically feasible in light of legislative momentum in recent years, and has a direct, positive impact on the economy.

Full Resources from this Article

More States Considering Practical, Popular Measures to Deal with Budgets

Center on Budget and Policy Priorities – States Continue to Feel Recession’s Impact
Citizens for Tax Justice – Glimmers of Hope on Taxes in the States
Institute for Taxation and Economic Policy – The ITEP Guide to Fair State and Local Taxes
The New York Times – Connecticut’s Better Budget
Progressive States Network – Blueprint: Rebuilding Prosperity for States and Working Families
The Wall Street Journal – WSJ/NBC News Poll Finds Support Lacking for Entitlement Reduction

This article is part of PSN's email newsletter, The Stateside Dispatch.
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