Passage of the Reagan tax bill will result in widespread revenue losses in most states and the District of Columbia, Citizens for Tax Justice, a labor-backed lobbying group, contended in a study released yesterday.
The group contended that total losses to the states could reach $27.5 billion over the next six years because the corporate and individual tax systems in many states are tied directly to the federal system. The tax bill enacted by Congress cuts taxes by a total of $749 billion over six years.
The study by Citizens for Tax Justice estimated total losses for the District of Columbia at $155 million, with $125 million from corporate tax revenues and $30 million from individual income-tax revenues.
For Maryland, the six-year revenue loss would be $433 million, with $314 million from corporate taxes and $119 million from individual taxes. The amount for Virginia would be slightly higher at $485 million, with $366 million from corporate taxes and $119 from individual taxes.
The lobby group, which opposed the Reagan tax cut, said the estimates are based on the assumption that "the 45 states, plus the District of Columbia, choose to conform their laws to the Reagan administration's so-called 'accelerated cost recovery system,' or '10-5-3,' as it is commonly known."
A total of 25 states will conform automatically unless legislative steps are taken to alter their tax laws, the group said. These states, which include Maryland, Virginia, Pennsylvania, New York, Ohio and New Jersey, would account for more than $15 billion of the estimated revenue losses, according to the group.
Other states traditionally have patterned their taxes on the federal system or will be under considerable pressure to follow suit, according to the group.
Dean Tipps, executive director of the lobby group, contended that "coming on top of scheduled reductions in federal aid to the states, revenue losses of these magnitudes should be unacceptable." He said the federal tax changes are "virtually eliminating the corporate income tax as a significant revenue raiser" and will place an excessive tax burden on the wage earner.