NCPA - National Center for Policy Analysis


August 16, 2006

State tax policy has undergone a fundamental transition over the past 25 years as lawmakers have faced changing state economies and taxes have become a major campaign issue, a report from Americans for Tax Reform (ATR) indicates.

According to the authors:

  • Tax increases are shrinking, particularly during recessions.
  • Tax cuts during periods of economic expansion are becoming more popular.
  • States are turning away from income tax hikes to targeted tax increases, such as taxes on tobacco products and toward other forms of "double taxation."
  • States with high tax burdens continually lose residents and the tax revenue based on their incomes to lower-tax states.

Nick Johnson, director of the State Fiscal Project at the liberal Center on Budget and Policy Priorities, agrees with most of the findings in the new study, but he believes the ATR report overstates the impact of income taxes on the desire of people to move from one state to another.

But Grover Norquist, president of ATR, says "state lawmakers have seen that voting for higher taxes means voting themselves out of office and forcing their residents and businesses to move to low-tax states."

Source: Randy Hall, "State Tax Increases Smaller, More Targeted, Study Shows,", August 16, 2006; based upon: Daniel Clifton and Elizabeth Karasmeighan, "State Tax Trends Over Twenty-Five Years: Tax Increases Down, Revenue Sources Shifting," Americans for Tax Reform, August 14, 2006.


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