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

Tax Reform

Arizona Lawmakers Approve Historic Tax Relief

Jonathan Williams/June 25, 2021
Tax Reform

Arizona Can Seize the Opportunity to Restore Economic Competitiveness

Tax Reform

Arizona Delivers COVID-19 Tax Relief

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Publications

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Model Policies

  • Hydrogen Tax Incentives Act Draft

    Policy Definitions (a) “Renewable Hydrogen”, as defined as hydrogen that is produced from electricity from a renewable energy source to create hydrogen gas from water, regardless of whether the renewable energy source is at a separate facility or the same facility as the system of apparatus …

  • Application Under Article V of the U.S. Constitution to Propose an Amendment to Require Fiscal Limitations and Accountability for the Legislative and Executive Branches of the National Government 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 ARPA Aid to State Governments Draft

    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 Draft

    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 …

  • Net Operating Loss Reform Act Final

    Section 1. Adopt the Net Operating Loss Provisions of the Internal Revenue Code as amended by the Coronavirus Aid, Relief and Economic Security (CARES) Act in Response to COVID-19 Pandemic. [INSERT STATE] is to adopt or otherwise conform to the federal CARES Act’s Temporary Repeal of Taxable Income Limitation contained …

  • Property Tax Appraisal Reform Act Final

    SECTION 1 Amends [INSERT STATE] Tax Code, as follows: If the appraised value of property in a tax year is lowered upon taxpayer appeal, the appraised value of the property as finally determined under that determination is considered to be the appraised value of the property for that tax year.

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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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