States refuse to abolish taxes, but they’re still eager to roll them back

at 11:37 AM ET, 06/14/2012

Conservatives in a handful of red states have been pushing to abolish some state taxes entirely. But they’ve been hitting a lot of roadblocks.

Kansas Gov. Sam Brownback (R) discusses massive cuts in state income taxes after signing them into law. (John Hanna - AP)
On Tuesday, the overwhelming majority of voters rejected a ballot measure that would have made North Dakota the first state to eliminate property taxes. Earlier this spring, Republican-controlled legislatures in Kansas and Oklahoma also defeated measures that would have abolished the state-income tax, fearing the loss of revenue.

But anti-tax momentum has still been growing on the state level: legislatures have regained their appetite for lower taxes as their budgets have slowly started to recover from the recession. For the first time in a decade, states cut more taxes than they increased them in 2011, according to the National Council of State Legislators. Most of this was due to the expiration of temporary sales tax increases in California and North Carolina. But states also cut corporate income taxes, among others.

It’s a trend that’s continued this year: last month, Kansas passed a major anti-tax bill that would cut the top income tax rate by nearly 25 percent, eliminates many business income taxes, and declines to extend a 2010 temporary sales tax hike. That’s still a far cry from abolishing the personal income tax entirely. But the tax cuts—which total about $3.7 billion over 5 years—are estimated to create a budget deficit of at least $2.5 billion by 2018, according to the Kansas Legislative Research Department. And Oklahoma legislators are currently trying to follow suit.

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