The End of the "No New Taxes" Era?

Following a national debate over the Bush tax cuts that saw federal income tax rates go up on the wealthiest Americans this January, state legislatures continue to diverge sharply on their approach toward taxes in the first few months of 2013. Anti-tax conservatives in some states, looking to hold fast to a Norquistian vision of tax cuts for the wealthy, are running into opposition. Meanwhile, other states are moving in the opposite direction on revenue for the first time in years. Reports this week show this divergence continuing, even as new research revealed the inefficacy of personal income tax cuts as a strategy for economic growth:

A new report released this week showed how state personal income tax cuts are in fact a "poor strategy" for economic growth. [Center on Budget and Policy Priorities]

After more than a decade since enacting any significant revenue increase, Minnesota is witnessing the end of its own "no new taxes" era. [Stateline]

"This idea that we just cut, cut, cut because we’re always in a financial crisis and we don’t make the investments we need; that’s going to leave Minnesota in a downward spiral."  -- Minnesota State Rep. Paul Marquart. [Stateline]

A tentative budget deal reached this week in New York included an unexpected extension of increased tax rates on high-income earners that were scheduled to expire in 2014. [BusinessWeek]

Maryland's House voted to increase the state gasoline tax. [Washington Post]

Louisiana Gov. Bobby Jindal is still seeking the total elimination of his state's income tax and an increase in the sales tax (with, as one lawmaker put it, "no coherent response" on how to address the increased burden on the poor). [Uptown Messenger]

After killing Gov. Dave Heineman's proposal to eliminate the state income tax in Nebraska, the state legislature advanced a bill this week to create a commission to study tax modernization proposals instead. [AP]

While most states seem to be heading in one direction or the other, a bipartisan tax reform proposal may be in the early stages of development in Oregon. [The Oregonian]


(This article originally appeared in the Stateside Dispatch, Progressive States Network's email roundup of the latest state policy news. Read the full Dispatch from March 23, 2013 here or sign up to receive the Dispatch in your inbox here.)