There’s been some confusion in recent days about whether the 258 members of Congress who have signed Grover Norquist’s “Taxpayer Protection Pledge” are allowed to vote in favor a bill that lets states collect sales taxes owed on purchases made over the Internet.  There is no reason for any confusion on this point.  Anybody with 15 seconds of free time and the ability to read the one sentence promise contained in the national pledge can see it’s completely irrelevant to the debate over online sales taxes:

I will: ONE, oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses; and TWO, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.

Since federal income tax rates, deductions, and credits are altered exactly zero times in the online sales tax legislation set to be voted on by the Senate, Grover’s federal affairs manager is being less than truthful when she says that “there’s really not any way an elected official [who signed the pledge] can vote for this.”

There’s no doubt that Grover would be tickled pink to have gotten 258 of our elected officials to pledge opposition to improving states’ ability to limit sales tax evasion over the Internet.  For that matter, he would probably be even more excited to have gotten those officials to promise to vote against any increase in the estate tax, gasoline tax, or cigarette tax, as well as the creation of a carbon tax or a VAT.  But none of these things fall within the scope of the pledge, either, and it’s a shame that Grover and his spokespeople have shown no interest in being truthful on this point.

When Indiana Governor Mike Pence was campaigning last year, a centerpiece of his campaign was a regressive 10 percent cut in the state’s already low personal income tax rate  It now appears that the Governor has convinced legislative leaders to agree to a tax cut about half that size, though it won’t be fully implemented until the end of his current term as Governor in 2017.

A new analysis from the Institute on Taxation and Economic Policy (ITEP) shows that while this new agreement is more modest than Governor Pence’s original proposal, its impact on the distribution of Indiana taxes is similar. Namely, most of its benefits will flow to the state’s wealthiest households. ITEP analyzed the effect that this agreement would have had on Indiana residents’ tax bills if it were in effect for 2012—the year for which most households just finished filing their tax returns. When this plan takes full effect in 2017, the size of the tax cuts will be slightly larger, but their distribution will be roughly the same. Among other things, ITEP found that for 2012:

- Cutting Indiana’s personal income tax rate to 3.23 percent would reduce the tax bill of the richest 1 percent of Indiana households by an average of $1,181.

- That same cut in the state’s income tax rate would reduce the average tax bill of middle-income households by just $56. 

- Low income households fare worst of all. The recently announced agreement would amount to a tax cut for the poorest 20 percent of Indiana households of just $10 on average in 2012, and roughly one in three members of this group would receive no tax cut at all.

Read the report here.

When Congressional tax writers signaled their intention to enact a new tax break for domestic manufacturing income in 2004, lobbyists began a feeding frenzy to define both “domestic” and “manufacturing” as expansively as possible.  As a result, current beneficiaries of the tax break include mining and oil, coffee roasting (a special favor to Starbucks, which lobbied heavily for inclusion) and even Hollywood film production. The Walt Disney corporation has disclosed receiving $526 million in tax breaks from this provision over the past three years, presumably from its film production work, and even World Wrestling Entertainment has disclosed receiving tax breaks for its “domestic manufacturing” of wrestling-related films.

But CTJ has now discovered, after poring over corporate financial reports, an example that may trump them all.

Silicon Valley-based OpenTable, Inc. provides online restaurant reservations and reviews for restaurants in all fifty states and around the world, connecting customers and restaurants via the Internet and mobile apps.  While members of Congress may enjoy how OpenTable can “manufacture” a last minute seating at their favorite Beltway watering hole, it’s hard to believe the company engages in any activity that most Americans would think of as manufacturing.

And yet OpenTable discloses in its SEC filing that the domestic manufacturing tax break reduced the company’s effective corporate income tax rate substantially recently, saving it about $3 million over the last three years.  Even as a small portion of the company’s overall tax bill, that $3 million is emblematic of the scores of absurd loopholes carved out of the corporate tax code.

President Obama has repeatedly proposed scaling back the domestic manufacturing deduction to prevent big oil and gas companies from claiming it, but we have argued that the manufacturing tax break should be entirely repealed. At a minimum, Congress and the Obama Administration should take steps to ensure that the companies claiming this misguided giveaway are engaged in something that can at least plausibly be described as manufacturing.

Let’s start with the facts. Every dollar invested in the IRS’s enforcement, modernization and management system reduces the federal budget deficit by $200. Here’s another metric. Every dollar the IRS “spends for audits, liens and seizing property from tax cheats” garners ten dollars back.

Can you say “return on investment?”

Here’s another fact. The IRS’s budget has been reduced by 17 percent since 2002 (per capita and adjusted for inflation), and that includes this year’s sequester cuts. To adapt to the $594.5 million in budget cuts required by the sequester, the IRS has announced it will be forced to furlough each of its more than 89,000 employees for at least five days this year. While deficit reduction is supposed to be the goal of the sequester, cuts to the IRS will probably increase the deficit because it’s the IRS, after all, that collects tax revenue.  In fact, one expert estimated recently that furloughing 1,800 IRS “policeman” positions could cost the Treasury – that is, all of us – some $4.5 billion in lost revenue.

Denied adequate resources over the years, the IRS has not been able to keep up with its current workload, let alone expand its work. For example, a new report on IRS enforcement found that the agency actually audited 4.7 percent fewer returns in 2012 than it did in 2011. Considering that the IRS typically recovers about 14 percent of the $450 billion of unpaid taxes in a single year with its current resources, by increasing IRS resources we stand to reap billions in additional revenue from noncompliant taxpayers.

The Obama Administration proposed in its fiscal year 2014 budget to increase the IRS’s budget to $12.9 billion, about $1 billion more than its 2012 budget, with about $5.7 billion of that going to enforcement.  This increase doesn’t go nearly far enough considering the substantial decline in its budget during the past decade, but it’s a small investment we’d be smart to make.

Tuesday, the Ohio House of Representatives approved their budget bill which included an across the board 7 percent reduction in income tax rates. Though the House tax plan is less costly than the Governor’s original proposal, Policy Matters Ohio, using Institute on Taxation and Economic Policy (ITEP) data, makes the point that this reduction will still benefit the wealthiest Ohioans. “For the top 1 percent, the tax plan would cut $2,717 in taxes on average. For the middle 20 percent, it would amount to a $51 cut on average. For the bottom 20 percent, it would result in $3 on average.”

This week the Minnesota Senate unveiled their tax plan which, (unlike Governor Dayton’s plan and the House plan wouldn’t create a new top income tax bracket,) would raise the current top rate from 7.85 to 9.4 percent. About 6 percent of taxpayers would see their taxes go up under the Senate plan. Both houses of the legislature and the Governor are committed to tax increases and doing the hard work necessary to raise taxes in a progressive way. Senator Majority Leader Tom Bakk recently said, "Some people are probably going to lose elections because we are going to raise some taxes, but sometimes leading is not a popularity contest."

We’d be remiss if we didn’t draw your attention to this study (PDF) by Ernst and Young for the Council on State Taxation which cautions state lawmakers about expanding their sales tax bases to include services purchased by businesses. Louisiana Governor Bobby Jindal’s failed attempt at income tax elimination included broadening the sales tax base to include a variety of services, including business-to-business services. Ironically, Ernst and Young was hired by the Governor to consult about his plan. Toward the end of the tax debate there, the AP pointed out the disparity between the Governor's consultants’ stance on taxing business-to-business services and what the Governor himself was proposing.

Rhode Island analysts are urging lawmakers to take a closer look at the $1.7 billion the state doles out in special tax breaks each year.  A new report from the Economic Progress Institute recommends rigorous evaluations of tax breaks to find out if they’re working. It then recommends attaching expiration dates to those breaks so that lawmakers are voting whether to renew them based on solid evidence about their effectiveness. These goals are also reflected in a bill (PDF) under consideration in the Rhode Island House -- Representative Tanzi’s “Tax Expenditure Evaluation Act.”

We’ve criticized Virginia’s new transportation package for letting drivers off the hook when it comes to paying for the roads they use, and now the Commonwealth Institute has crunched some new numbers that make this very point: “Currently, nearly 70 percent of the state’s transportation revenue comes from driving-related sources ... But under the new funding package, that share drops to around 60 percent ... In the process the gas tax drops from the leading revenue source for transportation to third place; and sales tax moves into first.”

Oklahoma Governor Mary Fallin and legislative leaders recently announced their intention to repeal the state’s top personal income tax bracket, bringing the top rate down from 5.25 to 5.0 percent in 2015. The rate could be dropped even more by 2016 if a revenue growth target is hit. Our partner organization, the Institute on Taxation and Economic Policy (ITEP), analyzed the initial cut down to 5.0 percent when it was proposed earlier this year, and found that its benefits would be heavily tilted in favor of the state’s wealthiest taxpayers. This is despite the fact that Oklahoma’s high-income taxpayers already pay far less (PDF) of their income in state and local taxes than any other group.

ITEP found that almost two-thirds of the tax cuts distributed under this plan would flow to the wealthiest 20 percent of Oklahomans, while the vast majority of the state’s poorest residents would receive no tax cut at all.  Moreover, while a family in the middle of the income distribution could expect about $39 in tax cuts per year, Oklahoma’s most affluent taxpayers would receive tax cuts averaging $1,870 every year.

A new statement from the Oklahoma Policy Institute provides some important context for understanding the budgetary impact of this proposal (excerpt below).

Since 2008, Oklahoma public schools have endured the third largest budget cuts in the nation. Out of control tax breaks contributed to a collapse in revenue from oil and gas drilling. We still don’t know what will be the full cost of State Question 766 or what impact federal budget cuts will have on Oklahoma’s core services.

In this situation, it’s not the time for more tax cuts that would do little to help average Oklahomans, take $237 million from schools and other core services, and make Oklahoma more vulnerable to an energy bust or economic downturn. … Yet the proposal announced today would commit us to tax cuts two years from now, when we have no way of knowing what Oklahoma’s needs or economic situation will look like.

By now you've probably heard that the U.S. Senate is close to approving a bill that would allow the states to collect the sales taxes already owed by shoppers who make purchases over the Internet.  Currently, sales tax enforcement as it relates to online shopping is a messy patchwork, with retailers only collecting the tax when they have a store, warehouse, headquarters, or other “physical presence” located in the same state as the shopper.  In all other cases, shoppers are required to pay the tax directly to the state, but few do so in practice.  The result of this arrangement is both unfair (since the same item is taxed differently depending on the type of merchant selling it) and inefficient (since shoppers are given an incentive to shop online rather than locally).

Unsurprisingly, two of the strongest proponents of a federal solution to this problem have been traditional “brick and mortar” retailers that compete with online merchants and state lawmakers struggling to balance their states’ budgets even as sales tax revenues are eroded by online shopping.  But this issue has also turned anti-tax advocates, states without sales taxes, and even online retailers against one another in surprising ways, for reasons of ideology and self interest. 

Ideological Frenemies, Norquist and Laffer

Supply-side economist Arthur Laffer recently argued in the pages of the Wall Street Journal that states should be allowed to enforce their sales taxes on online shopping as a basic matter of fairness, so that “all retailers would be treated equally under state law.”  We completely agree with this point, but Laffer makes clear that his larger aim is to shore up state sales taxes in order to make cuts to his least favorite tax—the personal income tax. It’s no secret that Laffer wants states to shift toward a tax system that leans heavily on regressive sales taxes, but it’s harder to advocate for such a shift if the tax can be easily avoided by shopping online.

Grover Norquist of Americans for Tax Reform stands in direct opposition to Laffer on this issue.  Norquist has been “making the case on the House side of either seriously amending it or even stopping” federal efforts to allow for online sales tax enforcement.  But Norquist reveals his fundamental misunderstanding of the issue when he argues that out-of-state retailers should be free from having to collect sales taxes because “you should only be taxing people who can vote for you or against you.”  In reality, retailers aren’t being taxed at all—they’re simply being required to do their part in making sure their customers are paying the sales taxes already owed on their purchases.

Delaware vs. The Other No-Sales-Tax States

Four states levy no broad-based sales tax at either the state or local level: Delaware, Montana, New Hampshire, and Oregon and Senators from these last three states are generally not interested to helping other states enforce their sales tax laws. After all, why vote for a “new tax” if there’s no direct benefit to their own states’ coffers?

But Delaware’s senators see the issue differently, as both Sen. Carper and Sen. Coons voted in favor of the bill.  In fact, Carper introduced his own bill for collecting tax on e-purchases years ago, explaining it this way: “The Internet is undermining Delaware's unique status” because “part of Delaware's attraction to tourists is that people can come and shop until they drop and never have to pay a dime of sales tax.”

Amazon vs. Other Internet Retailers

It shouldn’t come as a surprise that online retailers as a group have opposed legal requirements that their customers pay sales taxes on their purchases since it means these e-retailers would have to charge and collect that tax.  Some companies, however, like Netflix, have long collected (PDF) those sales taxes, even without a legal requirement to do so. But most have clung to online sales tax evasion as a way to undercut traditional retailers by up to 10 percent (or more, depending on the sales tax rate levied where the buyer is located).

One recent exception is eBay, which appears to have seen the writing on the wall and has pivoted from opposing the bill to watering it down – and it’s deploying its 40 million users as an army of online lobbyists to that end.

But it is Amazon that stands apart from other online retailers in fully supporting a federal solution to the patchwork of state laws and the growing number of deals it has finally had to strike with states. The company’s reason is likely two-fold.

First, Amazon has a “physical presence” in a growing number of states and plans to continue its expansion in order to make next-day-delivery a reality for more of its customers. As a result, Amazon will be legally required to remit sales taxes in more states in the future and will find itself at a competitive disadvantage if other online retailers remain free from sales tax collection requirements.  Second, Amazon processes a large number of sales for other merchants through its website and collects sales taxes on behalf of some of them – for a fee.  Amazon’s sales tax collection services could become much more lucrative in the future if more of the merchants it partners with are required to collect sales taxes.

This week Missouri is offering a sales tax holiday on energy efficient appliances. Not only are these holidays costly for state budgets, they are poorly targeted. That is, it’s generally wealthier folks who have the cash flow flexibility to time their purchases to take advantage of these holidays, when it’s poorer residents who feel the brunt of sales taxes in the first place. To learn more about why these holidays aren’t worth celebrating, check out The Institute on Taxation and Economic Policy’s (ITEP) policy brief here (PDF).

Here’s a great investigative piece from the Columbus Post Dispatch about the nearly $8 billion in tax code entitlements (aka tax expenditures) Ohio currently offers. The state needs to closely study these tax expenditures and determine if they are actually producing the economic benefits promised. Before debating extreme income tax rate reductions, Ohio lawmakers should also take a look at this ITEP primer on what a thoughtful, productive discussion of state tax expenditures looks like.

In this Kansas City Star article, ITEP’s Executive Director, Matt Gardner, talks about the fate of many radical tax plans this year in the states. “The speed with which these plans have fallen apart is as remarkable a trend as the speed with which they emerged,” he says. Kansas and its budget crisis have become a cautionary tale for other states considering tax cuts, but even the latest plans passed by the Kansas House and Senate are radical and could eventually lead to the complete elimination of the personal income tax.

Criticism of the tax cuts enacted in Kansas last year continues to mount.  We already wrote about Indiana House Speaker Brian Bosma’s caution that his state might become another Kansas, but now a number of media outlets have picked up on the fact that both the Center on Budget and Policy Priorities and the Tax Foundation called that Kansas tax cuts the “worst” (ouch!) state tax changes enacted in 2012.

Watch out, North Carolinians! It appears that Americans for Prosperity (AFP) is coming to town to the tune of $500,000 to pay for town hall meetings, “grassroots” advocacy and advertising all to support the dismantling of the state’s tax structure. Let’s hope the facts can defeat AFP’s cash.

Democratic Senator Max Baucus of Montana, chairman of the Senate Finance Committee which oversees tax legislation, announced today that he is retiring when his term closes at the end of 2014. Many people are asking how this will affect the tax reform that he hopes to shepherd through his committee. Last week, CTJ published an op-ed criticizing Baucus’s approach to tax reform.

Democratic and Republican tax-writers are holding bipartisan talks to craft a tax reform bill, even though there is no agreement between the parties on what the basic goals of such reform ought to be. One party recognizes a need for more revenue while another has pledged to not raise more revenue. This would be like holding bipartisan talks on immigration reform — if one party supported a path to citizenship while the other party pledged to round up all undocumented immigrants and deport them without exceptions…

A recent profile of Baucus's efforts informs us that “Baucus declined say whether he views tax reform as a way to raise revenue, although he did not rule it out. Instead, he said, that divisive question should be left unanswered until committee members have a chance to study areas of reform where they are more likely to agree.”

Read the op-ed.

Read CTJ's response to the Tax Foundation's claim that the U.S. has a high corporate tax rate.

Senator Bernie Sanders of Vermont recently appeared on Real Time with Bill Maher and disputed the claim by the Tax Foundation that the U.S. has the highest corporate tax in the world. Senator Sanders is right, the Tax Foundation is wrong.

CTJ explains that the effective corporate tax rate (the share of profits that corporations pay in taxes) is what matters, and the effective tax rate for U.S. corporations is quite low. The Tax Foundation relies on flawed studies to argue otherwise. For example, one study cited by the Tax Foundation excludes corporations paying a negative tax rate — in other words, excludes corporate tax dodgers. Obviously this will result in a higher estimated effective tax rate.

Read CTJ's full response.

A revealing new report from the Government Accountability Office (GAO) found that in 2011, the US government spent as much on corporate tax expenditures as it collected in corporate taxes. According to the report, 80 tax expenditures (exceptions, deductions, credits, preferential rates, etc.), cost the Treasury $181 billion in corporate tax revenue, which is the same as the total amount the Treasury collected in corporate taxes in 2011.

While the study looked at 80 corporate tax expenditures, over three-quarters of the revenue loses ($136 billion) were attributed to the four largest expenditures: accelerated depreciation, deferral of foreign income, the research credit, and the domestic production activities deduction. (CTJ has explained before that repealing these provisions would raise massive amounts of revenue.)

Making matters worse, 56 of the 80 tax expenditures that GAO looked at were used by individuals as well as corporations, resulting in an additional loss of $125 billion in revenue from the individual income tax. This happens because many corporate tax breaks can be used by businesses taxed under the individual income tax (the personal income tax), such as partnerships, S-corporations and other “pass-through” entities.

The report also revealed that more is spent on corporate tax expenditures in the budget areas of Commerce and Housing, International Affairs, and General Purpose Fiscal Assistance than is spent in direct federal outlays. For example, GAO found that the government spends only $45.7 billion in direct federal outlays for International Affairs, while spending $50.8 billion on corporate tax expenditures on this same budget function. Similarly, GAO concluded that one-third of the corporate only tax expenditures “appear to share a similar purpose with at least one federal spending program.”

These expenditures account for major U.S. corporations paying an average effective tax rate of half the 35 percent statutory rate, and often even zero in federal income taxes; elimination of these tax breaks should be the top priority for lawmakers looking to replace the sequester or reduce the deficit. In fact, a coalition of 515 groups recently called on Congress to repeal or reduce corporate tax expenditures as a way to raise revenue (as opposed to enacting corporate tax reform that is “revenue-neutral”). As Representative Lloyd Doggett (R-TX), who requested the GAO study, explained, “Corporate America did not contribute a nickel to the fiscal cliff deal that meant higher taxes for many Americans [and] it is reasonable to ask corporate America to contribute a little more toward closing the budget gap and to the cost of our national security.”

These corporate tax expenditures get nothing like the public scrutiny that direct spending is subject to. But tax expenditures for corporations are just like subsidies provided to corporations in the form of direct spending because Americans have to make up the costs somehow. That’s true whether it’s that bundle of earmark-like tax extenders that gets quietly renewed every year or two, or the rule allowing corporations to indefinitely defer taxes on foreign profits, or the massive breaks for depreciating equipment. All this is the spending of ordinary taxpayers’ dollars – and it merits the same critical attention.

In a stark departure from the last few years, one of the most debated state tax policy issues in 2013 has been the gasoline tax (PDF).  Until this February, it had been almost three years since any state’s lawmakers approved an increase or reform of their gasoline tax.  That changed when Wyoming Governor Matt Mead signed into law a 10 cent gas tax hike passed by his state’s legislature.  Since then, Virginia has reformed its gas tax to grow over time alongside gas prices, and Maryland has both increased and reformed its gas tax.  By the time states’ 2013 legislative sessions come to a close, the list of states having improved their gas taxes is likely to be even longer.

Massachusetts appears to be the most likely candidate for gas tax reform.  Both the House and Senate have passed bills immediately raising the state gas tax by 3 cents per gallon, and reforming the tax so that its flat per-gallon amount keeps pace with inflation in the future (see chart here).  In late 2011, the Institute on Taxation and Economic Policy (ITEP) found that Massachusetts is among the states where inflation has been most damaging to the state transportation budget—costing some $451 million in revenue per year relative to where the gas tax stood in 1991 when it was last raised.  Governor Deval Patrick has expressed frustration that legislators passed plans lacking more revenue for education—in sharp contrast to his own plan to increase the income tax—but he has also signaled that there may be room for compromise.

Vermont lawmakers are also giving very serious consideration to gas tax reform.  At the Governor’s urging, the House passed a bill increasing the portion of Vermont’s gas tax that already grows alongside gas prices.  The bill also reforms the flat-rate portion of Vermont’s gas tax to grow with inflation.  The Senate is now debating the idea, and early reports indicate that the package may be tweaked to rely slightly more on diesel taxes in order to reduce the size of the increase on gasoline.

Pennsylvania Governor Tom Corbett has also proposed raising and reforming his state’s gasoline tax.  While Pennsylvania’s tax is technically supposed to grow alongside gas prices, an obsolete tax cap limits the rate from rising when gas prices exceed $1.25 per gallon.  Corbett would like to remove that cap in order to improve the sustainability of the state’s revenues, and members of his administration have been traveling the state to explain how doing so would benefit Pennsylvanians.  While the legislature has yet to act on his plan, the fact that it has the backing of the state’s Chamber of Business and Industry is likely to help its chances.

In New Hampshire, the Governor has said she is open to raising the state gas tax and the House has passed a bill doing exactly that.  But there are indications that lawmakers in the state Senate might continue procrastinating on raising the tax, as the state has done for over two decades.

Nevada lawmakers are discussing a gas tax increase following the release of a report showing that the state’s outdated transportation system is costing drivers $1,500 per year.  ITEP analyzed a gas tax proposal receiving consideration in the Nevada House and found that even with the increase, the state’s gas tax rate (adjusted for inflation) would still remain low relative to its levels in years past.

Iowa lawmakers have been debating a gas tax increase for a number of years, and there may be enough support in the legislature to finally see one enacted into law.  The major stumbling block is that Governor Branstad will only agree to raise the gas tax if it’s part of a larger package that cuts revenue overall—particularly revenues from the property tax.  As we’ve explained in the past, such a move would effectively benefit the state’s roads at the expense of its schools.

Earlier this year, Washington State House lawmakers unveiled a plan raising the state’s gas tax by 10 cents per gallon and increasing vehicle registration fees.  Senate leaders are reportedly less excited about the idea of a gasoline tax hike, though there are indications they would consider such an increase if it were to pass the House.  While talk of a 10 cent increase has since quieted down, there are rumors that a smaller increase could be enacted.

Unfortunately, some states where the chances of gas tax reform once appeared promising have since begun to move away from the idea.  In Michigan, while the Governor and the state Chamber of Commerce have voiced strong support for generating additional revenue through the gas tax, neither the House nor the Senate appears likely to vote in favor of such a reform this year.  Meanwhile, the chances for a gas tax increase in Minnesota seem to have faded after the Governor came out against an increase and the House subsequently unveiled a tax plan that leaves the gas tax untouched.

Overall, 2013 has already been a significant year for state gas tax reform.  Both Maryland and Virginia have abandoned their unsustainable flat gas taxes in favor of a better gas tax that grows over time, just like construction costs inevitably will.  Hopefully, within the next few months, more states will have followed their lead.

Last week we brought you news that Louisiana Governor Bobby Jindal was abandoning his plan to eliminate the state personal and corporate income taxes and replace the revenue with an expanded sales tax. Instead, the Governor asked the legislature to “Send me a plan to get rid of our state income tax.” But now the legislature is denying the Governor’s request.

House Ways and Means Committee Chair Representative Robideaux has asked his colleagues to “defer” the bills they already had in the works to repeal the state income tax, and he’s said that he won’t allow hearings on any income tax repeal bill, closing the door on any attempt to eliminate the state’s income tax. Robideaux said, “I think it’s probably dead for the session, right now, there’s probably income tax fatigue.”  Importantly, he also asks, “Is there a constituent base out there demanding repeal of the income tax?” The answer is that two thirds of Louisianans actually opposed the Governor’s plan for this tax swap, which happens to be about the same percentage of Louisianans who stand to lose the most if any such tax plan gets implemented.

Jindal’s failure is a victory for tax justice advocates and a may serve as a lesson for lawmakers in other states entertaining similarly radical tax ideas.

The St. Louis Post Dispatch, for instance, editorialized, “Louisiana's lawmakers realize what Missouri's don't: Income tax cuts are suicidal.” Missouri lawmakers are debating their own draconian tax plan that would roll back income taxes. The Post Dispatch continues, “What Louisiana has recognized is that the supposed benefits of cutting state income taxes are vastly overstated. The impact of service cuts is vastly understated. The effect is that rich people and corporations get richer. Everyone else gets poorer.”  

In another state, Georgia, income tax elimination has been debated for years, but this columnist with the Atlanta Journal Constitution is hopeful that the tax justice victory in Louisiana will lead to Georgia lawmakers reconsidering their own proposal, which eliminates the personal and corporate income tax for no good reason.

Tax plans similar to Jindal’s have hit road blocks in Nebraska and Ohio this year. Among the many reasons these plans fail, it seems, is that when people realize that they amount to unwarranted tax cuts for the rich that raise taxes for everyone else and probably bust the budget, too, common sense prevails and these ideas are defeated. 

We know that Louisianans dodged a bullet when the Governor’s plan fell apart.  And while it’s good news that a big reason was widespread concern over its fundamental unfairness, the fact is Bobby Jindal is not the only supply-sider committed to eliminating the income tax. So we savor the victory, yes, but also prepare for the next battle as similar plans are winding their ways through other state capitals.

The Indiana Senate recently passed a budget that speeds up the phase-out of the state’s inheritance tax (PDF), cuts taxes for the politically well-connected financial industry, and reduces the state’s flat personal income tax rate from 3.4 to 3.3 percent.  

The income tax cut in the plan, though a scaled-back version of a plan that Governor Pence originally proposed on the campaign trail, is similarly regressive. A new report from our partner organization, the Institute on Taxation and Economic Policy (ITEP), shows that while the Senate income tax cut is significantly smaller than the Governor’s, the two plans are equally lopsided—distributing the lion’s share of the benefits to the state’s most affluent residents.

ITEP finds that over half (55 percent) of the income tax cuts under either plan would go to the best-off 20 percent of Indiana residents. Out of this group, the top 1 percent would fare best of all—receiving an outsized 14 percent share of the benefits.  Their average tax cut would range from $694 under the Senate’s plan to $2,361 per tax filer under the Governor’s preferred approach.

Middle- and lower-income taxpayers would not fare nearly as well. The entire bottom 60 percent of households would be divvying up just 23 percent of the tax cuts enacted under either plan, while the poorest 20 percent of Indiana residents in particular would see a tiny 2 percent share.  Under the Senate plan, this group would see an average tax cut of just $6, while the $20 cut they’d see under the Governor’s proposal is only marginally more generous.

This lopsided tax cut comes on top of a state tax system that is already, according to ITEP’s ranking, the ninth most regressive in the country.

But even putting fairness considerations aside, a recent letter from House Speaker Brian Bosma referenced by ITEP points out that Indiana’s last round of tax cuts wrecked the state’s budget. Even with late news of a boost in revenue projections, Indiana lawmakers would be wise to avoid a repeat of that fiscal history for the sake of tax giveaways that serve no greater economic good.

For more detail, see ITEP’s new report: Indiana Senate’s Income Tax Cut: Just as Lopsided as the Governor’s.

On April 15, the majority of Americans file their income taxes, federal and state. As CTJ and ITEP demonstrate in their annual Who Pays Taxes in America, state tax systems are overwhelmingly regressive and the federal system just barely makes up for that. Today we highlight some great, creative efforts in a few states promoting the importance of state tax fairness.

Michigan: The Michigan League for Public Policy organized a social media campaign and video called “Pay it Forward Michigan.” The League explains that “its aim is to remind us about the good things our tax dollars create or protect — clean water, parks, good schools, safe streets, good roads, protection for children, great universities, the arts, bike paths, pristine beaches and more.”

North Carolina: Russell the Public Investment Hound was back and starring in a new film, The Great Tax Shift.  Also, check out this tax day Fair Fight Luchadora (Mexican wrestling) showdown that was staged across the street from the North Carolina General Assembly building. From the press advisory: “Tax Day is a reminder that wealthy and powerful special interests aren’t made to pay their fair share because too few lawmakers in Raleigh and in D.C. care about being champions of the People who elected them. This year, working people will get to settle the score!” Spoiler alert: the people’s champ won!

Ohio: Amy Hanauer of Policy Matters Ohio writes in the Cleveland Plain-Dealer about why income tax cuts won’t help the state’s economy, and highlights research from ITEP to make her case.  She also shares a personal experience with a fire in the basement of her home just days before Tax Day in 2001. “The firefighters arrived in minutes and put out the still-tiny fire ... and I suddenly had a more vivid picture of what my un-mailed taxes would pay for. Twelve years later, I can thank countless teachers, crossing guards, snowplow drivers, police officers, water inspectors and others for helping keep my kids educated, protected, safe and happy in our community.”

Wisconsin: Ever wonder what Wisconsin income taxes help fund? Read all about it here and check out the gorgeous infographic showing how tax revenues are an economic investment.

Photo courtesy of FairFight North Carolina.

Citizens for Tax Justice has been publishing studies of what major U.S. corporations pay in federal income taxes for years. Not just the effective tax rate, but also what they actually pay in federal (and state) taxes on their profits each year. From time to time, however, we hear the critique that there is no way to figure out what corporations actually pay in federal income taxes, based on corporate 10-K annual reports that we use.
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Most recently, in the Washington Post of April 12, 2013, Allan Sloan levels this mistaken charge. According to Sloan:

 "There are more than a dozen tax metrics disclosed in a 10-K — but not the federal income tax incurred for a given year. . . . The stories you read about disgracefully low corporate taxes are based on the “current portion” of taxes due, disclosed in 10-K footnotes. Many people —­ including me, years ago, before I learned better — use that number as a proxy for the federal income tax that a company pays. But that’s a mistake. . . . The current-portion number . . . has no connection whatsoever with what a company actually forks over to the IRS for a given year."

As we pointed out in our November 2011 study, Corporate Taxpayers & Corporate Tax Dodgers 2008-10, the “current” federal income taxes that corporations disclose in their annual reports, adjusted for stock-option tax benefits that are reported separately, are the best (and only) measure of what corporations really pay (or don’t pay) in federal income taxes.

To read our full explanation of why this is true, click here.

We wholeheartedly endorse the call, made by Sloan and others, for more transparent disclosure of tax information in corporate annual reports. But the disclosure we already get, if one knows how to understand it, is quite fine. The journalists, lawmakers, policy advocates and the general public who rely on our research can be confident in our findings about corporate taxes.

EVENT ADVISORY/PHOTO-OP FOR APRIL 15, 2013

BILLBOARD TRUCK IN WASHINGTON, DC ASKS, DO YOU PAY MORE TAXES THAN MAJOR CORPORATIONS?

 Citizens for Tax Justice Mobile Billboard to Visit Dupont, K Street, Capitol Building and National Capitol Post Office over Eight Hour Day

 Washington, DC – “Do you pay more Federal Income Taxes than Facebook, Southwest Airlines, GE, Pepco and other Giant Corporations? Yes You Do!” These words are splashed across a red, white and blue, ten by twenty foot rolling billboard that will be seen by thousands of tourists, food truck customers, pedestrians and commuters on Monday April 15^th, courtesy of Citizens for Tax Justice (CTJ). CTJ’s April 11 report, “Ten Reasons We Need Corporate Tax Reform,” supports the billboard’s text that will be circulating around DC between 11 AM and 7 PM on Tax Day.

The billboard route maximizes visibility for passersby and access for news cameras, in particular at its final stop affording a visual of taxpayers visiting the Post Office. The route and schedule is divided into four parts, all times Eastern, primarily in NW DC. Some stops scheduled, others by request.

11 AM – Noon: Circling Dupont Circle and pulling off the Circle onto 19^th St. NW (in front of Dupont Metro, Krispy Kreme, Front Page bar) at 11:30 for cameras and as needed.

Noon – 2 PM: Lunch at K Street Parks - Farragut Sq, McPherson Sq, Franklin Park. Route is rectangle of K Street NW to 13^th Street to I (Eye) Street to 17^th Street. Stops at I (Eye) near 15^th/Vermont at 1:00 and 1:30 PM and as needed.

2 – 3 PM: US Capitol Building Loop - 3^rd St NW/SW to Independence Avenue to 2^nd St SE/NE to Constitution Ave. No stops scheduled but as needed will be on 3^rd Street NW between Madison/Jefferson Streets.

3:30 – 7 PM: National Capitol Post Office, 2 Mass Ave, NE at North Capitol Street. Billboard will park kitty corner from Post Office entrance (doors on North Capitol), adjacent to Sun Trust Bank, in sight of Dubliner bar (F Street). Depending on parking, truck’s 5-minute loop passes busy tourist sites as it runs up North Capital, onto Louisiana Ave NE onto New Jersey Ave NW and back on Mass Ave NW for media availability.

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Citizens for Tax Justice (CTJ), founded in 1979, is a 501 (c)(4) public interest research and advocacy organization focusing on federal, state and local tax policies and their impact upon our nation (www.ctj.org).

Idaho Senate leadership took a difficult stand on a high-profile issue in favor of good tax policy by refusing to give the Girl Scouts a special tax break on their famous cookies. Their counterparts in the Idaho House, however, weren’t nearly as principled, bowing to the pressure of some of the nation’s youngest tax policy lobbyists and voting 59-11 in favor of the special break. The Girl Scouts plan to return to the statehouse next year in hopes of convincing the Senate to support the new tax subsidy, which is like any other (PDF) subsidy.

Nevada lawmakers are debating whether they should join Maryland and Wyoming as the third state to raise its gasoline tax this year.  The Institute on Taxation and Economic Policy (ITEP) provides some important context with a new chart showing that even if the state’s gas tax were raised by 20 cents over the next 10 years (as the Senate is considering), the rate would still be below its historical average in value.

Texas business owners are pushing state lawmakers to repeal the state’s largest business tax, trotting out familiar arguments about the economic benefits of tax cuts. Fortunately, as the Austin American Statesman reports, “a $1.2 billion annual price tag ... appears to have doomed the effort.”

Massachusetts House lawmakers set up a showdown with Governor Patrick over transportation funding in the Bay State with the passage of their less ambitious revenue package this week. Governor Patrick’s budget includes almost $2 billion in new revenues to boost transportation and education spending raised primarily through increasing the personal income tax. The Governor’s plan also includes a sharp reduction in the state’s sales tax. The House package, by contrast, raises just over $500 million through increases in fuel and cigarette taxes as well as a few business tax changes. Governor Patrick threatened to veto any tax package from the House or Senate that does not raise significant revenue for both transportation projects and education.

(Photo courtesy Bitterroot Star)

In a speech to the Louisiana Legislature yesterday, Governor Bobby Jindal announced that he would “park” his tax plan. There is no doubt this is a huge blow to supply-side advocates and Arthur Laffer enthusiasts who tout false claims that tax cuts will ultimately pay for themselves and increase economic development.

The Governor’s controversial plan would have repealed the state’s personal and corporate income and franchise taxes and then paid for these tax cuts by increasing the sales tax. The sales tax changes included increasing the state tax rate from 4 percent to 6.25 percent, and expanding the base of the tax to include a wide variety of previously untaxed services and goods. ITEP found that the Governor’s plan would have raised taxes on the bottom 60 percent of Louisianans, as tax swaps tend to do.

The Governor’s plan met enormous resistance “in recent weeks as business groups and advocates for the poor have assailed its effects and think tanks have questioned whether the math in the proposal adds up.” Now the Governor is backing away from his proposal and urging the legislature to send him its own bill – one that would also eliminate the personal income tax – leaving “tax reform” up to the state legislature.

The key fact to bear in mind for Louisiana is that aside from raising the sales tax, there is really no way for the state to replace nearly $3 billion in revenue that will be lost if the income tax is eliminated. Lawmakers would do better to stay away from supply-side theories and instead close corporate tax loopholes, reverse the regressivity of the state’s tax structure and invest in public infrastructure because that is what real reform looks like.

Earlier this year, Kansas Governor Sam Brownback proposed another round of personal income tax cuts (on top of those he signed into law last year that are creating a massive hole in the state’s budget). Read ITEP’s analysis of that proposal here.  Now the Kansas House and Senate have each responded with their own tax cut plans, and are expected to reconcile their differences soon.

To date, much attention has been given to the major difference between the House and Senate plans — the Senate bill includes permanently preserving a temporary sales tax rate hike while the House plan would allow the hike to expire. What the two plans have in common, however, is what should be of paramount concern to all Kansans because both plans eventually lead to the elimination of the state’s personal income tax – which would grow the hole in the state’s coffers by another $2.2 billion.  

Policymakers have not proposed a way to pay for this tax cut. Instead they are making an explicit assumption that income tax repeal will at least partially “pay for itself.” Kansas’ balanced-budget requirement means that the state will be forced to offset at least some portion of the revenue loss from income tax repeal, and it’s a sure bet that further increases in the state sales tax will be the primary remaining revenue-raising mechanism lawmakers would look to.

ITEP’s latest analysis runs some scenarios that show the impact on Kansas taxpayers of using a sales tax increase to replace various percentages of the revenue currently raised through the personal income tax.  For example, if 50 percent of the revenues were made up with sales tax hikes, the poorest 40 percent of Kansans would see a net tax increase from this change and the state sales tax rate would have to be raised from 6.3 to 9.11 percent, pushing the statewide average state/local rate up to 10.86 percent.

Read ITEP’s full report here.

Kansas is one of several states contemplating a “tax swap” of some sort, but no state can meet its fiscal needs fairly and sustainably without an income tax -- especially in the absence of extraordinary natural resources (like Alaska’s oil), for example, or out-of-state consumer dollars to tax (like Nevada’s tourism).

Information is starting to trickle out of the White House about the budget proposals that the President is to release on Wednesday of next week. The proposal will be controversial because it includes cuts in Social Security and Medicare spending. Here's what we know so far about the tax proposals in the plan.

1. It appears that President Obama will propose less in new revenue than the $975 billion called for in the budget resolution approved by the Democratic majority in the Senate. This seems very ill-advised, as we have already noted that the Senate resolution would not even raise enough revenue to pay for the level of spending that Ronald Reagan presided over. As the Washington Post explains,

The budget is more conservative than Obama’s earlier proposals, which called for $1.6 trillion in new taxes and fewer cuts to health and domestic spending programs. Obama is seeking to raise $580 billion in tax revenue by limiting deductions for the wealthy and closing loopholes for certain industries like oil and gas.

This revenue would be used to reduce the deficit.

The President's proposal will have some additional revenue-raising proposals, "increased tobacco taxes and more limited retirement accounts for the wealthy that are meant to pay for new spending." It is unclear how much those additional proposals would raise, but it appears that the total new revenue would be below what the Senate budget resolution calls for.

2. The vast majority of the President's proposed new revenue would come from his proposal to limit the tax savings of each dollar of certain deductions and exclusions claimed by wealthy taxpayers to 28 cents. A recent CTJ report breaks down the composition of the tax expenditures limited by this proposal and how some taxpayers would be affected.

3. One of the new revenue-raising proposals from the President that would pay for new spending is a limit on individual retirement accounts (IRAs) for the wealthy that CTJ proposed in its recent working paper on revenue proposals. We noted that IRAs provide a tax subsidy to encourage retirement saving, which Congress surely never intended to allow Mitt Romney to save $87 million tax-free.  

The Washington Post reports Obama’s plan would

… also seek to generate revenue by limiting how much wealthy individuals can accrue in their tax-retirement accounts. Such accounts would be capped at $3 million in 2013 dollars — which officials say is enough to finance a $205,000 a year income.  

We’ll have more analysis as we learn more.

Two new analyses from Citizens for Tax Justice demonstrate that the richest Americans still are not shouldering a disproportionate share of taxes and that the poor are still not avoiding them, despite stories that are commonly told every year around Tax Day.

The first is Who Pays Taxes in America in 2013?, a fact sheet we release each year. It examines all the taxes paid by Americans (all federal, state and local taxes) and finds that people in all income groups do pay taxes (despite claims to the contrary by Mitt Romney and others) and that the tax system overall is just barely progressive.

The second analysis is our six-page report called New Tax Laws in Effect in 2013 Have Modest Progressive Impact. This goes into more detail and explains that the tax code has not changed in 2013 despite recent headlines about unprecedented taxes on the rich.

For example, Americans in all income groups are paying more than they would pay if Congress had just extended the tax laws in effect in 2012, but the share of taxes paid by the top one percent has risen only slightly. The richest one percent, who will receive 21.9 percent of America’s income in 2013, will pay 24 percent of all the taxes in 2013. If, instead of enacting the “fiscal cliff” deal that allowed some tax cuts for the rich to expire, Congress had just extended the 2012 tax laws, then the richest one percent would pay 23.1 percent of all the taxes in 2013.

In other words, the “fiscal cliff” deal made our tax system slightly – not dramatically –more progressive.

Since January, we’ve brought you updates as best we could about Louisiana Governor Bobby Jindal’s controversial tax swap plan, but details remained elusive. Finally, late last week, the Governor released enough information – including a newly calculated, bigger sales tax rate increase – and the Institute on Taxation and Economic Policy (ITEP) was able to complete a full analysis of the Governor’s tax plan. The centerpiece of the Jindal plan is the outright repeal of the state’s personal and corporate income and franchise taxes. These tax cuts would be paid for primarily by increasing the state sales tax rate from 4 percent to 6.25 percent, and expanding the base of the tax to include a wide variety of previously untaxed services and goods.

ITEP’s analysis shows that, if fully implemented in 2013, the plan would increase taxes on the poorest sixty percent of Louisianans overall, while providing large tax cuts for the best-off Louisiana taxpayers. In fact, ITEP found that the poorest 20 percent of Louisianans would see a net tax increase averaging $283, or 2.4 percent of their income, while the very best-off Louisianans would see a tax cut averaging almost $30,000, or 2.5 percent of this group’s total income.

Louisiana Department of Revenue (DOR) Executive Counsel Tim Barfield continues to insist that all Louisianians will be better off under the Governor’s plan. But, as ITEP’s report points out, DOR’s estimates are flawed: they only include the impact of taxes paid directly by individuals and they ignore the impact of taxes paid initially by businesses. This approach presents an incomplete picture of how the Jindal plan would affect Louisianans, though, because a substantial share of the current sales tax, and the large majority of the expanded sales tax base the Governor proposes, would be paid initially by businesses. Economists generally agree that these business sales taxes are ultimately passed on to consumers in the form of higher prices.

Louisianans themselves aren’t buying the Governor’s numbers either. His tax swap plan has the support of only 27 percent of Louisianans – and that was before he upped the sales tax increase even further.

Read ITEP’s full analysis of Govenor Jindal’s tax plan here.

Just in time for Tax Day 2013, our quarterly newsletter Just Taxes is arriving in mailboxes this week. This edition features original articles discussing the fallacies of anti-tax legislation in state legislatures, Facebook's tax avoidance schemes, the release of ITEP's new report, Who Pays? and highlights of ITEP and CTJ's recent press coverage. Starting this year, we are putting back issues of Just Taxes online, and you can now browse editions from the past nine years.  

Just Taxes is a provided as a service to our current donors – who make our work possible – so we’re not making this special content available until six months after publication. (The current issue, for example, will be posted in October.) So to make sure you receive the most up-to-date edition, please make a contribution to CTJ or you can choose to make a tax-deductible contribution to ITEP.  And thank you for all the ways you show support for our work.

The largest revenue-raising proposal put forth by President Obama, which is expected to be among the proposals the White House plans to release next week, would limit the tax savings of each dollar of certain deductions and exclusions to 28 cents. CTJ's new report on the President's proposal examines who would be affected and also breaks down the composition of the tax expenditures limited under the proposal.

For example, the report finds that Obama's proposal, which would only apply to married couples with AGI above $250,000 and singles with AGI above $200,000, would affect just 2.4 percent of taxpayers in 2014. The deduction for state and local taxes would make up over a third of the tax expenditures limited, and the deduction for state and local taxes along with the charitable deduction would, together, make up over half of the tax expenditures limited under the proposal.

Read the report.

Are economically disadvantaged families in the US likely to reverse their fortunes anytime soon? Not according to a new report by the Brookings Institution, which found that growing economic disparities between Americans are becoming increasingly permanent and irreversible. In other words, the study confirms that disadvantaged Americans are finding it increasingly difficult to move up the income ladder, while at the same time the position of the well-off is increasingly secure.

Brookings also found that between 1987 and 2009 the US tax system only “partially mitigated” the increase in income inequality and that it was not enough to “sufficiently alter its broadly increasing trend.” This result is not all that surprising given that the overall (combined state and federal) tax system is barely progressive, meaning that it can only have a small redistributive impact.

While many countries have taken dramatic steps to reduce income inequality, the US has allowed income inequality to grow so extreme that it now has the fourth highest level of income inequality in the developed world. Looking at the low end of the scale, the US Census Bureau found that over 46 million (PDF), or 1 in 6, Americans were below the poverty line in 2011 (the most recent year for which data is available).

But don’t expect a revolution just yet. Most Americans are wholly unaware of how off track our economic system has gotten. For example, as the viral video “Wealth Inequality in America” explains, there is a huge disconnect between the actual distribution of wealth, the distribution of wealth as the public perceives it, and the distribution that the public believes is desirable.

According to the study (PDF) on which the video was based, Americans believe that the top 20 percent hold only 58 percent of the country’s wealth and that under an ideal system, the top 20 percent would own just 32 percent of the wealth. The reality, however, is that the top 20 percent actually own about 84 percent of the country’s wealth. Consider, for example, that the heirs to the Wal-Mart fortune alone own as much wealth as the bottom 40 percent of Americans combined.

One of the best ways to combat rising economic inequality and increase economic mobility would be to enact progressive tax reforms and use the additional revenue raised to pay for critical investments in education, healthcare, and other areas that are needed to improve the economic mobility of lower and middle income Americans.

Here’s some happy news: a recent poll finds that just 27 percent of Louisianans support Governor Bobby Jindal’s tax swap, and that’s before the Institute on Taxation and Economic Policy (ITEP) released its latest analysis showing that the poorest 60 percent of taxpayers in Louisiana would see a tax hike as a result of the Governor’s plan.

A robotics company based in Nevada recently decided to abandon the state’s allegedly “business friendly” environment in favor of Silicon Valley in California, where there are better trained employees and plenty of deep pocketed investors. Nevada does not levy a personal or corporate income tax, but as Romotive founder Keller Rinaudo explains: "It was not a short-term economic decision ... We have to find experienced roboticists, and that really only exists in a few places in the world, and California is one of them."

Maryland’s gas tax will be increased and reformed starting July 1 under a bill just sent to Governor Martin O’Malley by the state’s legislature.  This year’s increase will be something less than 4 cents per gallon, but the tax will now rise each year alongside inflation and gas prices, as recommended by ITEP. ITEP showed that even with the increase, Maryland’s gas tax rate will still remain below its historical average and be less than the state probably needs.

Here’s an interesting story in the Minnesota Star Tribune about how Governor Dayton’s tax plan would impact the wealthiest Minnesotans. While opponents resort to the usual tax-hikes-kill-jobs refrain, Wayne Cox of Minnesotans for Tax Justice notes, “Economists believe keeping teachers and firefighters on the payroll is at least three times more helpful to the economy than keeping income tax rates at the top the same.”

Tax cuts for opposite ends of the income spectrum are getting opposite treatment in Maine and Arkansas. This week, Maine lawmakers rejected a bill that would cut taxes on capital gains (which heavily benefits wealthy taxpayers) and approved an increase in the state’s Earned Income Tax Credit (EITC) (PDF), which amounts to a tax cut to low- and moderate-income families. But last week in Arkansas, a House panel approved a cut in taxes on capital gains while passing up an opportunity to enact a state EITC.

Idaho lawmakers have opted for a dramatically scaled back tax cut on business equipment.  Rather than repealing the business personal property tax entirely as Governor Butch Otter had proposed, the House and Senate have sent him a bill that exempts the first $100,000 of property from the tax.  This change eliminates the tax for 90 percent of Idaho businesses while costing the treasury a fraction of the amount of outright repeal.

Even with the bill’s $20 million price tag, the Associated Press (AP) reasonably described it as a victory for counties and schools that would have been hit hard if the tax were repealed.  The AP also called it a “setback” for big businesses’ major lobby—the Idaho Association of Commerce and Industry (IACI).  IACI has pledged to continue lobbying for full repeal next year.

Had the business personal property tax been repealed in full, the biggest winner would have been Idaho Power, which would have seen its tax bill drop by anywhere from $10.5 to $15.3 million per year. Our partner organization, the Institute on Taxation and Economic Policy (ITEP), helped put this property tax cut into context with a report explaining that Idaho Power already pays nothing in state corporate income taxes.  Looking at nationwide state corporate tax payments, ITEP showed that from 2007 to 2011, the company actually collected a $7 million state tax rebate despite earning $623 million in profits. That amounts to an overall effective tax rate of negative 1.1 percent.

While it’s discouraging that lawmakers prioritized cutting taxes this session on the heels of last year’s regressive income tax cut, the decision to keep the business personal property tax on the books is a welcome bit of fiscal sanity.