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

State Legislator of the Month – KY Representative Sal Santoro

May 21, 2020
Tax Reform

State Legislator of the Month – OH Representative Jena Powell

Business

Policy Prescriptions: Fiscal Discipline to Address Economic and Health Care Challenges in the Face of COVID-19

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Publications

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Model Policies

  • Statement of Principles on Truth in Property Taxation Final

    Statement of Principles on Truth in Property Taxation Guiding Principles: Utah’s Example Utah enacted its Truth in Taxation law in 1985 to provide a solution to taxpayer unrest from ever-increasing property taxes. Accountability – While Utah’s law does not limit property taxes, it makes local elected officials think …

  • Resolution Urging Congress to Cut the Federal Corporate Tax Rate Final

    Summary: This resolution encourages Congress to cut the 35 percent federal corporate tax rate and replace the U.S.’s “cross-border” tax system with a “home country” tax system in order to improve the ability of the 50 U.S. states to compete for international investment and jobs in the global economy. Model …

  • An Act Relating to Online Lodging Marketplaces – Establishing Statewide Standards, Protecting Privacy, and Enabling Efficient Tax Remittance Final

    Section 1 – Definitions “Lodging Marketplace” means a person that provides a platform through which an Unaffiliated Third Party offers to rent a Vacation Rental or Short-Term Rental to an occupant and collects the consideration for the rental from the occupant. For the purposes of this paragraph: “Unaffiliated Third Party” …

  • Uniform Standard for Lodging Taxes Act Final

    Section 1.  Definitions [Appropriately designated section number] of the statutes is created to read: (1) “Hotel” means any structure or space, or any portion thereof, that: (a)  Is occupied, or intended or designed for occupancy, by transients for dwelling, lodging, or sleeping purposes; and (b)  Accepts on-site reservations for accommodations; …

  • Proclamation Recognizing Tax Freedom Day Final

    Whereas, Tax Freedom Day is a significant date for taxpayers and lawmakers because it represents how long Americans as a whole have to work in order to pay the nation’s tax burden, and Whereas, Americans will collectively spend more on taxes in [Insert Current Year] than they will on food, …

  • An Ordinance to Repeal Personal Property Tax Collection Final

    WHEREAS, Ordinance No. [Insert number], passed on [Insert date], established personal property tax collection in [Insert Jurisdiction], and WHEREAS, the [Insert State] [insert state statute] has given [Insert Jurisdiction] the option not collect personal property taxes, and WHEREAS, personal property taxes make it impossible for businesses and citizens to own …

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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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