June 18, 2007

And The Award Goes To......

The Progressive States Network released an interim report Thursday detailing state-by-state legislative successes this past year and promoting best practices. The report was presented as part of a conference hosted by the Center for American Progress which featured representatives from Iowa, Washington, and Maryland, three of the clear leaders in progressive policy. Unified around a progressive agenda, and fueled by constituent support, Democrats in many states pushed through reforms that failed to be tackled by the federal government. Tax policy reform didn’t seem to be the focus of legislative summaries in the PSN publication despite its omnipresence in state budget debates. Nevertheless, it’s important to recognize themes of reform appearing among the states. Which tax policies garnered the most attention and favor? Here are the highlights.

Income Tax Reductions

Since state and local governments primarily rely on regressive property and sales taxes, efforts to make income taxes as progressive as possible take some burden off the lower-income citizens. Arkansas completely removed the income tax burden from 81,000 lower-income families and also cut the grocery tax in half. Virginia similarly removed 140,000 lower-income residents from income tax rolls. Hawaii created a plan to allot $245 million in tax benefits to the poorest citizens.

Earned Income Tax Credits

By rewarding work and allowing credits for income taxes paid, adopting the EITC at the state level is another effective way to make a tax system more progressive. Iowa increased their EITC to 7% of the federal credit amount, and also made the credit refundable if no income taxes are owed. New Mexico created an EITC program, giving credit to 200,000 New Mexico families for 8% of the federal credit amount. Kansas expanded its EITC program, providing it with $46 million over the next five years.

For the complete listing of progressive victories see the Progressive States Network report.


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