Tax Policy

This presentation on state fiscal issues covers five broad areas.   Part I highlights the fiscal position of states in the aftermath of the Great Recession while Part II highlights some state strategies to balance budgets and generate revenue.  Part III identifies several structural flaws in state tax systems that will continue to plague state finances going forward while Part IV explores some of the major expenditure categories looming on the state fiscal horizon.  Finally, Part V hones in on some of the “green shoots of growth” and the promising economic development projects that will contribute toward reviving state economies.

A new CSG Capitol Facts and Figures examines state cigarette taxes.

Cigarette taxes are a means to raise state revenue in a down economy as well as to discourage the use of tobacco.  Studies have found that increasing the price of tobacco effectively reduces smoking rates and can potentially save billions of dollars in medical expenses and loss of productivity annually.  However, states have failed to use the increased tax revenues to expand tobacco prevention and control programs.

Just this month, some states have been trying to fill budget gaps during very tense budget decision making – but do some of their methods come at the expense of nonprofits?  The National Council of Nonprofits and the Association of Fundraising Professionals seem to think so.

The interest in taxing soda on a state level has rebounded in recent months. While only 14 states levy a sales tax on food for home consumption, 39 states and Washington, D.C., impose a sales tax on at least some soda purchases. In some of these states, the tax is simply part of the sales tax that applies to food; in others, it is a separate or higher tax.

During times of recession, businesses cut back because of a lack of demand for their products, but not so for state governments. As states are losing revenue and having to make do with less—residents hit hard by the down economy often need government services more.

With falling revenues, unprecedented declines in state spending and a national unemployment rate hovering around 10 percent, states face limited options for deficit mitigation as they enter into what will likely be one of the worst budget years since the Great Depression. Facing combined budget gaps exceeding $130 billion over the next two years, along with significant increases in Medicaid spending, this session provided state officials with an overview of the policy responses required to enact transformational changes delivering services as well as options available for deficit mitigation.

E-newsletter Issue #47 | May 27, 2010
 

Renowned economist Arthur Laffer had a simple message to attendees at The Council of State Governments’ Economic Summit of the States:

“If you tax people who work, and pay people who don’t, don’t be surprised if you find a lot of people not working,”  Laffer said on the closing day of the summit May 23.

BE IT THEREFORE RESOLVED, that CSG recommends that Congress reject any proposal that would convert the current voluntary compliance tax system into a Government-provided bill presentment tax system, where the tax collector would expand its role into routinely preparing  the tax returns of millions of lower and middle income citizens

State eNews Issue #43 | March 31, 2010

States want tax delinquents—whether businesses or residents—to get right with their departments of revenue. States are getting serious about collecting millions in back taxes because, now more than ever, they are desperate for cash.

“Obviously this is related to the cash crunch going on and states are desperate for this revenue,” said Sujit CanagaRetna, senior fiscal analyst with The Council of State...

Pages