By Paul Bedard
May 30, 2018
The Trump tax cuts, which prompted hundreds of companies to dole out $2,000 bonuses and wage hikes, has also prompted several states to proposed reduced taxes, according to a sweeping review of the nation.
About a quarter of all governors have proposed tax cuts, said a new analysis of the 47 “State of the State” addresses in 47 states.
According to the annual “State of the States Report” from the American Legislative Exchange Council, 11 governors proposed tax cuts, a sizable shift from past years. Two others proposed cuts and some increases.
“In a majority of the 2017 State of the State addresses, governors focused heavily on tax policy, with many pointing to the pro-growth effects their states have experienced as a result of tax relief,” said ALEC’s report.
“As a result of the first federal tax reform in more than 30 years, many states are looking forward to higher tax revenues or surpluses. A number of governors outlined their plans for this unexpected tax revenue, often with the focus of giving it back to the people through their own tax relief plans,” added the analysis.
Most of the tax cut proposals impacted personal income and only one governor — Alaska’s Bill Walker — proposed an income tax.
The change in the federal tax structure also led to other fiscal policy changes in the states, said the report.
“The untold story of federal tax reform’s success is the opportunity the new law has provided governors to advance pro-taxpayer proposals. Unexpected state revenue resulting from federal tax reform has shifted the debate in many state capitals this year towards proposals that favor tax relief,” said Jonathan Williams, chief economist and vice president of the Center for State Fiscal Reform. “These 2018 state tax reforms continue to build on a trend, as states continue to look for ways to become more competitive. All told, in the past five years, more than 30 states have significantly reduced their tax burdens,” he added.