Republican lawmakers in several states are aiming to do what no state has done
in more than three decades: eliminate income taxes.
Efforts are under way in at least three states to do away with personal
and corporate income taxes, while Republicans in control elsewhere are
considering rate cuts.
"At this point I don't know if I could give you what that possible
outcome is," Phil Berger, North Carolina's senate leader said Wednesday
(January 16), according to the Associated Press, "but I can tell you that
we're going to shoot for the lowest possible (rate), and zero is the absolute
lowest."
With Republicans now controlling both legislative chambers and the
executive branch for the first time since 1870, such a proposal has perhaps
never had a better chance in North Carolina.
Nebraska Governor Dave Heineman used his state of the state address to
push his plan. "Our current tax system needs to be modernized and reformed,"
he said Tuesday "It's been nearly five decades since Nebraska had a serious
debate about our overall tax system. Life has changed drastically since the
1960s, when we were operating in a completely different economic environment."
In Louisiana, Governor Bobby Jindal says his goal is to "eliminate all
personal income tax and all corporate income tax in a revenue neutral manner."
Proponents say such efforts help draw business to their states.
Seven states -- Alaska, Florida, Washington, Nevada, South Dakota, Texas
and Wyoming -- do not tax individual income, according to the Tax Foundation.
Three states -- Nevada, South Dakota and Wyoming -- have no corporate income
taxes.
But doing away with income taxes is easier said than done, even in
GOP-controlled states.
Alaska was the last to do so, when it abolished personal income taxes in
1980. Last year, efforts failed in Kansas and Oklahoma, though Kansas Governor
Sam Brownback did manage to push through major cuts.
As Stateline has noted, eliminating a central source of revenue is filled
with political and practical concerns. Critics warn it forces either drastic
spending cuts, which can jeopardize the delivery of services, or it means
lawmakers must look elsewhere for new tax revenue elsewhere, often from the
less well-off.
Plans in Louisiana and North Carolina, for instance, would offset lost
revenue by increasing the states' flat sales taxes, shifting the burden to the
poor. Heineman says he would find revenue by eliminating some deductions for
businesses.
Meanwhile, in Kansas, Brownback has faced some backlash after major
spending cuts. Last week, a district court ruled the state has shortchanged
its schools by $400 million, depriving students a "suitable" education, which
is mandated by the constitution.
Nevertheless, Brownback has pledged to further lower the rates.
"When I started as governor, we had the highest state income tax in the
region, now we have the second lowest, and I want us to take it to zero," he
said in his state of the state address. "Look out Texas, here comes Kansas."
