After resisting the proposal for months, New York Governor Patterson has agreed with legislative leaders to raise income taxes on the wealthiest state residents in order to help close the state budget gap. “It’s a profound breakthrough for tax fairness,” said Dan Cantor, executive director of the Working Families Party, an organization of New York individuals, labor unions and other groups that was a leader in the campaign to raise the tax rates. The New York deal is part of a national movement of state leaders looking to raise new revenue from high-income residents to avoid budget cuts and fund needed investments for long-term economic recovery.
Most sales and property taxes are regressive and burden
working families more than the wealthy; however, states can create a fair tax system by
balancing those regressive taxes with an income tax that includes higher tax
brackets for the very wealthy.
Policy Center highlights, there
is a wide disparity in state income tax systems, but recently a number of
states have been seeking ways to make their tax systems more progressive.
or increasing State
Earned Income Tax Credits to ease the tax burden on lower-income
working families is another tool to help increase fairness in the tax code.
Preserving taxes on wealthy estates is another
area where states are working to maintain tax fairness (and raise some needed
The budget news is grim in some states. Twenty states face a combined
budget shortfall of at least $35 billion for 2009, according to analysis by the Center on Budget Policy & Priorities (see CBPP graph below). Another 8 states will likely have budget problems next year or the year after.