By the end of 2023, about half of the states will have cut rates on income within three years.
But some Progressive states are intent on driving away businesses and consumers.
The State Tax-Cut Movement
Please consider the Wall Street Journal article on The State Tax-Cut Movement
At least six states have kicked off their 2023 legislative sessions with income-tax cut proposals. Newly inaugurated Governors in Arkansas and Nebraska campaigned on rate cuts and are asking legislators to follow through. Leaders in Virginia and Montana want to cut rates modestly with bipartisan support. Large GOP majorities in West Virginia and Utah are considering significant cuts after hesitating last year.
Each of these states has at least one neighbor where tax rates have dropped recently, and competition is sustaining the trend. “We were the cool kid on the block 15 years ago when we moved to 5% flat,” said Rusty Cannon, president of the Utah Taxpayers Association, referring to his state’s flat income-tax rate this month. But in the past two years Colorado has adopted a 4.4% top rate on income, and Arizona dropped its rate to 2.5%. “We’re no longer the cool kid on the block at all,” said Mr. Cannon.
The tax-cutting trend took off in 2021 as state revenues boomed, driven by postpandemic reopening, rising stock prices and capital gains, and federal aid. By September 2022, 31 states were outperforming their prepandemic revenue trajectories, according to Pew Research. Twenty-one states have cut their income taxes in this period, according to the Tax Foundation, and they’re betting that returning revenue to taxpayers will spur faster economic growth.
Flat-rate tax reforms are also spreading. Last year Georgia, Iowa, Mississippi and Arizona joined Idaho in enacting one. That brings the nationwide total to 13, after public-employee unions finally won a referendum that nixed Massachusetts’s flat 5% income-tax rate last year. Now the top Bay State rate is 9%, an invitation to move to Nashua, N.H.
Carbon Taxes in New York
In contrast to tax cutting states, New York Keeps Piling on Taxes
New York is bleeding taxpayers and business, so how does Gov. Kathy Hochul open her first legislative year? By proposing to raise taxes some more. That’s the economic news buried in the $227 billion budget she unveiled this week that includes a higher payroll tax plus a new CO2 cap-and-trade program.
The Governor is directing state officials to develop an economy-wide carbon trading system that will force businesses to pay for their CO2 emissions. This is a stealth tax increase. The state will establish a cap on statewide emissions that will decline over time to reduce emissions to 40% below 1990 levels by 2030 and 85% by 2050. The state will auction allowances to fuel distributors, utilities, manufacturers and other businesses to offset their CO2 emissions.
New York companies and workers will pay for all this. Europe’s cap-and-trade program has made its manufacturers less competitive, so the European Union is planning to implement a carbon tariff on imports to level the playing field. A New York carbon border tax would violate the Constitution’s Commerce Clause.
New York’s cap-and-trade model is California, where CO2 allowance prices have climbed by nearly two-thirds over the last three years and are driving up energy costs. While California’s cap-and-trade program has reduced oil production in the state, its CO2 reductions have been overwhelmed by wildfires.
Two Gas Tax Hikes in Illinois
Meanwhile, in Illinois, Illinoisans are stuck with two gas tax hikes in 2023.
Illinoisans are already familiar with high gas prices, which are the highest in the Midwest, according to AAA.
Gas tax hikes disproportionally hurt lower-income residents, who give up a larger percentage of their paycheck to pay for gas.
Even without upcoming gas tax hikes, Illinoisans already pay the second-highest gas taxes in the nation thanks to Gov. J.B. Pritzker doubling the state gas tax to 38 cents per gallon from 19 cents in 2019. He also added automatic annual hikes for inflation that drove the rate to 39.2 cents but delayed the 2022 increase until after the election – leading to two hikes in 2023.
Tax-the-Rich Measures Pass in Massachusetts, Fail in California
On November 9, 2022 Bloomberg reported Tax-the-Rich Measures Pass in Massachusetts, Fail in California
Voters in Massachusetts approved a measure to raise taxes on millionaires after a hard-fought battle that pitted unions against wealthy opponents, while Californians rejected a proposition that targeted the state’s highest earners to pay for climate initiatives.
The Fair Share Amendment in Massachusetts, known colloquially as the millionaires’ tax, would amend the state constitution to allow for a 4% surtax on annual income over $1 million, lifting the rate from the current flat 5%. About 52% of voters approved the measure, according to the Associated Press.
Proponents, dominated by teachers’ unions, raised more than $28 million for the measure, roughly double what opponents raised.
Not to worry, I am sure California will pas more tax hikes this year. The returns speak for themselves.
Outbound Exodus States
Moneywise reports on the Top 10 States People are Leaving
- New Jersey, Outbound Moves 70.5%: The Garden State holds the dubious distinction of holding the highest percentage of outbound moves — for the fourth year in a row. New Jersey has some of the highest property taxes in the nation.
- Illinois, Outbound Moves 67.2%: The state lacks job opportunities and reached an all-time high for resignations in August last year during the Great Resignation. To make matters worse, Kiplinger named it the least tax-friendly state for middle-class families in 2021.
- New York, Outbound Moves 63.1%: The top reason for movers exiting New York last year was to be closer to one’s family (29.4%), closely followed by retirement (29%).
- Connecticut, Outbound Moves 60.1%: The Nutmeg State is burdened by high taxes and expensive housing, and its residents simply cannot afford to stay.
- California, Outbound Moves 59.3%: California’s home to Disneyland, Hollywood and Silicon Valley — what’s not to love? — but the Golden State can lack luster for those who can’t afford it.
- Michigan, Outbound Moves 57.7%: Although the desire to be closer to family was the primary motivation for almost half the inbound movers, a third of outbound movers said they exited the Great Lake State for jobs.
- Massachusetts, Outbound Moves 57.6%: The Bay State might be renowned for its top educational institutions and charming coastal towns, but it’s also one of the least affordable states to live in the U.S.
- Louisiana, Outbound Moves 56.5%: An overwhelming majority of movers pointed to work as their primary reason for getting out of Louisiana — more than 30 percentage points higher than the second biggest motivator (family). And nearly half of movers were under the age of 45.
- Ohio, Outbound Moves 56.3%: A new job or job transfer is the number one reason for Ohio’s outbound moves, but 28% of Buckeye movers say it was retirement that prompted them to relocate elsewhere.
- Nebraska, Outbound Moves 55.7%: College-educated adults are moving out of Nebraska for better jobs and pay, and looking at larger cities with more to offer, according to David Drozd, research coordinator at UNO’s Center for Public Affairs. Nearly 42% of movers pointed to work opportunities as their primary reason for departing the state.
Affordability, taxes and jobs are the reasons people leave. Higher taxes are a big part of it.
It Takes 3 Weeks to Escape Illinois
On July 10, 2020 I reported It Takes 3 Weeks to Escape Illinois
Why 3 weeks? That’s how long it takes to reserve a one-way U-Haul outbound.
We escaped and love our new location in Utah.
This post originated at MishTalk.Com.
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https://itep.org/whopays-map/
The bottom 20% pay a state tax rate of 17.8% while the top 1% pays 3.0% (no typos here).
This is what a national flat tax would do to the entire country.
To say that after Dobbs, American abortion laws will simply resemble those in Europe, is to drape a veil of normalcy over plans for a post-Roe world that will drastically circumscribe basic freedoms of speech, movement, and association. But whatever that future looks like, it will not look like Europe does today. It will be much worse.”
https://www.theatlantic.com/ideas/archive/2022/07/roe-overturned-europe-abortion-laws/670539/
… and end up shivering in the dark someplace in Texas
You had me at ‘Illinois’.
The ‘long game’ here, in particular for Chicago, is the equivalent of Perkins’ ‘Confessions of an Economic Hit Man’.