This week we continue to track revenue shortfalls, governors' budget proposals, and other tax news around the country, finding most proposals to be focused on slashing taxes and reducing public investments despite public opinion and economic research showing the benefits of well-funded state services and progressive tax policies.
Back in December, Kansas Gov. Sam Brownback gave an interview with the Wall Street Journal and suggested President-elect Trump should follow his state's example and cut taxes as well as spending. The sheer gall of the suggestion belies the fact that Kansas's tax cuts have resulted in credit downgrades, lack of adequate funding for essential services such as education, and ongoing significant revenue gaps (including a $340 million revenue gap to close this fiscal year and an estimated $1.1 billion gap through the end of fiscal year 2019). Brownback's distorted reality was on display again last week in his State of the State Address, in which the fact that Kansas has been struggling with perpetual budget crises for the past four years was remarkably absent.
There are a lot of troubling components of the tax reform packages being proposed by President-Elect Donald Trump and the House GOP, but one that especially stands out is the push to give companies a tax break on the earnings they are holding offshore. Unfortunately, proposals rewarding the nation's most egregious tax dodging multinational corporations with hundreds of billions in tax breaks represent an area where lawmakers on both sides of the aisle seem to agree, making it a potential area of movement if broader tax reform efforts flounder.
If the incoming Trump Administration and Republican-lead Congress have their way, fundamental changes to the tax code are afoot. The most important similarity between the Ryan and Trump tax plans are dramatic reductions in the corporate tax rate and across-the-board tax cuts whose benefits primarily flow to the richest Americans.
Congress Shouldn't Defy Public Opinion and Good Policy by Cutting Taxes for Corporations and the Wealthy
Members of Congress have floated fundamental changes to the tax code for years, but last week marked a ramping up of these efforts as Republican Speaker of the House Paul Ryan met with President-elect Donald Trump and his advisors to discuss how to move forward with tax reform in 2017.
Plans floated by the incoming administration and Trump would dramatically cut taxes for the wealthy and corporations and eliminate revenue necessary to meet the nation's most basic priorities. In other words, if either the blueprint for Ryan or Trump's plans (or some combination of both) becomes law, the outcome will likely be the furthest thing from true "reform" of our tax system.
This week brings still more states looking for solutions to revenue shortfalls, multiple governors' State of The State addresses, important reading on counter-transparency and local-preemption efforts, and more.
This week we bring you updates on major revenue shortfalls looming in Nebraska, Oklahoma, and Pennsylvania, as well as gas tax changes taking effect in some states and being debated in others.
By all indications, 2017 is shaping up to be a major year for state gas tax reform. Alaska Gov. Bill Walker has already proposed tripling his state's gas tax. Task forces in Indiana and Louisiana have laid the groundwork for significant gas tax reforms in those states. And Tennessee Gov. Bill Haslam seems to be on the verge of releasing a gas tax proposal as well. Altogether, it appears that more than a dozen states will seriously debate gas tax changes next year.
Thank you for reading the Tax Justice Blog and Tax Justice Digest. We're going on hiatus until Jan. 3, 2017, to recharge our brains and get into the holiday spirit with bad fruitcake and eggnog. Well, maybe not the latter two. But we will be revving up our tax analysis chops because next year we will head into one of the most significant federal tax battles in the last generation.
In advance of the new year, several governors have released tax and budget proposals for their states' next two fiscal years. Below, proposals from Montana, Washington, Alaska, Arkansas, and Oklahoma are outlined. While these proposals are not necessarily indicative of nationwide trends we expect to see in 2017, some help to set a good example of progressive solutions to raising revenue and improving tax fairness.