Tax Cuts for Corporations and the Super Rich Are Killing State Revenues
by Wesley Tharpe
January 24, 2024
Introduction:
(Common Dreams) As the 2024 legislative season starts, state policymakers again face a critical choice when it comes to tax policy: whether to pursue policies that ensure wealthy households and corporations pay their fair share and that vital public services are funded adequately, or to continue the recent trend of costly, regressive tax cuts that undermine their ability to meet people’s needs or invest in the future. With state revenues weakening and other risk factors on the horizon, states should reject calls for additional tax cuts and instead protect and raise revenues to support public services that help families and communities thrive.
Over the past three years, a wide swath of states have taken a counterproductive tax-cutting path: using the cover of temporary budget surpluses stemming from federal COVID-19 relief and the subsequent economic recovery to enact costly, regressive, and permanent cuts to their state income tax systems. But the federal relief has expired, and states have mostly spent the fiscal aid.
The fallout in lost revenue could be substantial. As our recent report detailed, 26 states cut personal and corporate income tax rates over the past three years. Those states stand to collect an estimated $111 billion less over the next five years than they otherwise would have, with the price tag in lost revenues hitting nearly $30 billion a year by 2028 (see graphic provided in article linked below). The damage is already starting to show up on some state balance sheets.
Tax cuts on that scale could translate into serious harm, especially at a time when state budgets are under increasing strain from a host of factors, including expiring federal relief funds and a modestly cooled economy. Shrinking revenues will jeopardize current levels of state support for vital public services like schools, health services, and income support programs. They will also constrain states’ future potential by limiting policymakers’ ability to make new investments to tackle unmet or emerging needs and issues, such as child poverty, the health of pregnant or postpartum people, or housing affordability.
Read more here:
https://www.commondreams.org/opinion/s ... -the-rich
caltrek's comments: The good news, as discussed further down in the article and not cited above, is that some states are taking steps to rectify this lopsided situation. Discussed examples include Massachusetts, Minnesota, Washington State, Colorado, Maine, New Jersey, New York, Vermont, and the District of Columbia.
Don't mourn, organize.
-Joe Hill
