Feb 02, 2012 5:46 AM GMT
I've always thought it a bit odd to rely on a tax on people's productivity.
A year after Republicans swept into office across the country, many have trained their sights on what has long been a fiscal conservative's dream: the steep reduction or even outright elimination of state income taxes.
The idea has circulated among academics and think-tank researchers for years. But it's moving quietly into mainstream political discourse, despite the fact that such sweeping changes would almost certainly mean a total rewiring of tax systems at a time when most states are still struggling in the aftermath of the recession.
"I think there's going to be more action that way," especially as Republican governors release their budget plans, said Kim Rueben, an expert on state taxation at the Brookings Urban Tax Policy Center.
Last year, GOP lawmakers in many states quickly went to work on a new conservative agenda: restricting abortion, cracking down on illegal immigration, expanding gun rights and taking aim at public-employee unions.
Emboldened by that success, the party has launched income tax efforts in Idaho, Kansas, Maine, Missouri, Ohio, Oklahoma and South Carolina. But it's not clear how all those states would make up for the lost revenue, and Rueben said she's not aware of any state in modern history that has eliminated an income tax.
Nine states already get by without an income tax, mostly by tapping other sources of revenue. Nevada and Florida rely on sales taxes that target the tourism industry. Alaska has taxes on natural resources, and Texas imposes substantial property taxes. The other five states are: New Hampshire, South Dakota, Tennessee, Washington and Wyoming.