Tax Reform

Key Points
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Key Points
  • A vibrant, growing economy allows businesses and households to flourish.
  • A state’s economic vitality starts with a principled tax code that is fair, transparent and competitive relative to other states.
  • Over the past decade, the nine states without a personal income tax have consistently outperformed the nine states with the highest taxes on personal income – in job creation, population growth and even tax revenues.
  • With the right set of policies in place, lower-tax states can attract much-needed human and financial capital from higher-tax states that penalize wealth creation. 

Mainstream economists, small business owners and taxpayers across the country understand that growth-oriented reforms mean increased opportunity for all. As demonstrated by the annual Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, sound tax and fiscal policies are critical to economic health, allowing businesses and households to flourish.

A dynamic state economy starts with a principled tax code. As noted in the ALEC Principles of Taxation, state tax codes should be fair, transparent and economically neutral. Low, competitive tax rates on a broad tax base offer a level playing field to all. In this environment, more residents will benefit from greater economic growth.

The advantages of a low-tax environment are clear. Over the past decade, the nine states without a personal income tax have consistently outperformed the nine states with the highest taxes on personal income. Similarly, those states with no income tax saw their population rise 109 percent faster than their high-tax counterparts. In those same ten years, job growth in states with no income tax increased 130 percent faster versus the states with the highest income taxes. Even state and local tax revenues in the nine states without income taxes grew 51 percent faster. While other factors have surely played a role, these general trends held true decade after decade for the past half-century.

As the research overwhelmingly shows, competitive tax and fiscal policies are vital to a state’s future. With the right set of policies in place, lower-tax states can attract much-needed human and financial capital from higher-tax states that penalize wealth creation.

Articles

Health

The Reconciliation Spending and Health Care

Brooklyn Roberts/October 1, 2021
Tax Reform

A Successful Northeastern Regional Tax and Economic Policy Academy

Tax Reform

Governor Cox Discusses the Secret to Utah’s Success at ALEC 48th Annual Meeting

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Publications

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Model Policies

  • Resolution Urging Congress to Protect Consumer Privacy in Banking and Financial Transactions Final

    Resolution Urging Congress to Protect Consumer Privacy in Banking and Financial Transactions WHEREAS, the Biden Administration and some in Congress have proposed changes to tax information reporting which would require financial institutions to provide the Internal Revenue Service reports of incoming and outgoing transactions from every customer financial …

  • Statement of Principles on ARPA Aid to State Governments Final

    Statement of Principles Temporary Funds Require Temporary Spending History reveals that federal spending and bailouts are not a “free lunch” for states. Academic research shows that federal aid to the states increases both state spending and overall tax burdens. If state leaders spend temporary federal funds, the increased spending should …

  • Resolution Urging Congress to Let States Cut Taxes Final

    Model Resolution WHEREAS, the American Rescue Plan Act (ARPA) included $350 billion in State and Local Fiscal Recovery Funds, despite an increase in total state and local revenue in calendar year 2020; WHEREAS, ARPA funds were in addition to hundreds of billions in federal assistance to state and local governments …

  • Act to Provide a Cost-of-Living Adjustment for Taxpayers Draft

    Model Policy SECTION 1. [insert state] code, concerning the standard income tax deduction, is amended as follows: (A) [insert state] shall increase annually the standard deduction provided by the cost-of-living adjustment for the current calendar year, rounding the amount to the nearest ten dollars ($10). (i) For purposes of this …

  • Article V Application to Propose an Amendment to Require Fiscal Limitations and Accountability for Federal Legislative and Executive Branches Draft

    Model Policy Section 1. The state legislature hereby makes an application to Congress, as provided by Article V of the Constitution of the United States of America, to call a convention limited to proposing a package of five interrelated amendments to the Constitution of the United States of America to: …

  • Statement of Principles on State Taxation of Digital Advertising and Data Usage Draft

    Statement of Principles Opposition to Discriminatory Tax Treatment Well-crafted tax policy should not favor one form of commerce over another. Policies that target digital goods and services for taxation that their traditional counterparts do not face arbitrarily favor the latter, creating a competitive imbalance. Tax policy should be carefully structured …

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Task Forces

Tax and Fiscal Policy

The ALEC Tax and Fiscal Policy Task Force is dedicated to researching and promoting sound policy aimed at creating a …

Press Releases

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