Tax deal represents a missed opportunity
Gov. Walz and legislative leaders in the state House and Senate announced the outline of a budget deal Monday morning. Fox 9 reports: The agreement calls for $4 billion in…
In an op-ed for the Wall Street Journal this weekend, Grover Norquist noted that “eight states have no personal income tax” and that:
Two more states have already enacted laws to phase to zero. New Hampshire, which never taxed wage income, voted in 2021 to phase out its tax on dividends and interest over five years…[and]…Louisiana…has set a path to reduce its income tax every year triggers are met. These triggers could take Louisiana’s income tax to zero by 2034, particularly if the Legislature implements additional rate cuts in coming years.
Ten other states have begun the march to a zero rate. West Virginia’s Senate, with the enthusiastic support of Gov. Jim Justice, has voted to draw down the state income tax. So has the state House in North Dakota. Mississippi Gov. Tate Reeves was elected in 2019 on a promise to end the income tax. In January, under the leadership of Speaker Philip Gunn, the Mississippi House voted 96-12 to move to zero.
Arizona Gov. Doug Ducey was re-elected in 2018 with the stated goal of driving the income tax to zero. Last year the Legislature, led by House Majority Leader Ben Toma and Sen. J.D. Mesnard, passed a phase-down of the personal income tax to a flat rate of 2.5% by 2025. Arizona Republicans are committed to taking the rate to zero.
North Carolina has been on the path to zero for its individual and corporate rates since 2013, when the House and Senate began revenue-trigger-facilitated tax reform that permanently cut the state personal and corporate income tax rates. They started with a top individual rate of 7.75% and a corporate rate of 6.9%. Thanks to the latest round of tax cuts, the now-flat personal income tax will fall to 3.99% by 2027, and the corporate rate, now 2.5%, will zero out over the next decade.
Wisconsin legislators recently announced that their goal is to eliminate the state income tax. They need a governor who would sign such a reform, which they don’t have but may get after November. “When you look at all the states that are growing right now, they don’t have a state income tax,” state Sen. Roger Roth said in January after it was announced that the state has a nearly $4 billion surplus.
Iowa Gov. Kim Reynolds has a plan to reduce the personal income tax to a flat 4% over four years. Senate Majority Leader Jack Whitver and Senate Ways and Means Chairman Dan Dawson have a plan that moves to a flat rate of 3.6% over six years, followed by a full phaseout.
Oklahoma Gov. Kevin Stitt is promoting a significant income-tax reduction and making it clear this is step one on a march to zero. In South Carolina, Gov. Henry McMaster led his 2021 State of the State address with a commitment to cut the state income tax.
In Arkansas former Trump press secretary Sarah Huckabee Sanders is the Republican candidate for governor, running on a promise to end the income tax on the heels of a phased reduction of the income tax signed by Gov. Asa Hutchinson.
Stacked up against all this, Gov. Walz’ proposal to send you a one-off check for $175 with his name stamped all over it is, for want of a better word, “weak sauce.”
Minnesota’s forecast budget surplus of $7.7 billion represents a historic opportunity to get this great state back on the right track. Instead of becoming ever-more of an outlier for higher taxes and higher government spending, we should get behind permanent tax rate cuts as other, growing states are doing.