Many states are finally taking a more balanced approach to their budget troubles by looking to raise revenue to avoid further deep cuts to education and health care, including New York who recently restructured their tax structure to generate more revenue from millionaires and California who is considering the same. These kinds of reforms will help states shore up their immediate revenue shortages, but will also bring long-term stability and flexibility as they look to rebuild their economies in the years to come. However, there are a handful of states that don’t currently have the option of generating revenue this year by taxing wealth because they lack a state income tax, making them more vulnerable to lagging revenues in a prolonged downturn like we’re experiencing now. This is certainly the case for a state like Washington, which has experienced some of the most severe budget deficits over the past three years, because they are too dependent on the state sales tax as a revenue stream. That’s why the Washington State Budget & Policy Center is building support for a proposal to tax the capital gains of the state’s wealthiest residents.
This past Tuesday, Maine votersconsidered legislation which would have reformed the state's tax structure and bond measures that will bolster infrastructure investment.By a large margin, Mainers rejected a law passed last June, LD1495, to lower the top income tax rate from 8.5 percent to 6.5 percent for state residents earning less than $250,000 annually by broadening the sales tax to include different services and shifting tax burden to nonresidents by increasing the meals and lodging tax from 7 to 8.5 percent.
As states struggle to close budget gaps, it's worth highlighting that
due to tax changes at the federal level, most middle income families are
paying a far smaller percentage of their income in federal taxes than
they did a few years ago. So while states should concentrate revenue
increases on those who can most afford it, there is greater capacity
among middle income families to absorb some tax increases due to the
lower federal tax burden.
Last Tuesday, Oregonians overwhelmingly approved
two ballot initiatives that ratified legislative action last year to
increase high-end personal income and corporate taxes. The failure of the anti-tax movement in Oregon
is one more in a long stream of right-wing initiatives
rejected by voters at the ballot box. In fact, progressive revenue
generation as part of a balanced approach to addressing state deficits
has been popular with both voters and legislatures for years. This Dispatch
will provide both the facts and messages to debunk opposition to smart
revenue options, while outlining a few of the best revenue approaches
to filling budget holes.