Fourteen states cut taxes in 2014, including six traditionally blue states, according to a new report by the American Legislative Exchange Council.
To make the group’s list, a state must substantially lower taxes at the state level in a broad and neutral manner that does not pick winners and losers, and is not offset by other tax increases. 2014 includes the blue states of New York, Rhode Island, Wisconsin, Michigan, Minnesota and Maryland.
“The types of tax changes that were passed in 2014 suggest that many states are setting the stage for broader and more fundamental tax changes in the 2015 legislative session,” co-author Jonathan Williams, director of the ALEC Center for State Fiscal Reform, said in a statement.
Maryland effectively reduced its relatively burdensome death tax by upping the exempted income from $1 million to the federal level of $5.34 million.
Michigan voters approved a measure to phase out a business property tax worth $500 million by a 69 percent to 31 percent margin.
Wisconsin used a $911 million budget surplus to fund $800 million worth of tax breaks, including a property tax and income tax cuts.
Minnesota eliminated a number of taxes, including the marriage penalty and three corporate taxes. Combined, the breaks are expected to save taxpayers $443 million in the 2014-2015 fiscal year and 956 million in the 2015-2016 fiscal year.
New York passed corporate tax reform cutting the number of brackets in half and reducing the corporate rate from 7.1 percent to 6.5 percent. A minimum add-on tax was also eliminated and the estate tax reduced.
Rhode Island also increased the exemption of the estate tax, estimated to save taxpayers up to $18 million, and reduced a corporate income tax from 9 percent to 7 percent.
“Making sure that taxpayers are able to keep more of their hard-earned money allows them to save and invest in state economies,” co-author Ben Wilterdink, research analyst at the ALEC Center for State Fiscal Reform. “Reducing the tax burden will boost economic growth and enhance a state’s economic competitiveness.”
This is the second round of cuts in a row for Kansas, Nebraska, Wisconsin, Florida, Indiana and Ohio, although the overall number is down from last year, when 18 states cut taxes.
ALEC works with state legislatures to advance policy based on limited government and free markets.
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