NC Budget and Tax Center

Progressive income taxes are an important part of state tax systems

Progressive income taxes are an important part of state tax systems and offer advantages that far outweigh the volatility in revenue during a recession, according to a recently released report by the Center on Budget and Policy Priorities (CBPP).

Proponents of cutting and eliminating personal income and corporate income taxes contend that doing so will spur economic growth and make the state’s revenue system more stable. However, the CBPP report highlights that eliminating income taxes would further challenge the state tax system’s ability to generate adequate revenue for public investments that promote economic growth and opportunity. The report notes that while state personal income taxes are subject to wider fluctuations, over the long-term income taxes grow more than other state taxes, and thus better reflect economic performance.

The report highlights ways that states can manage the ups and downs of state tax systems without eliminating or flattening state income taxes. Building up rainy day reserves, using extra revenues from good times for one-time expenditures, and shoring up unemployment insurance trust funds are some of the examples presented. As policymakers pursue comprehensive tax reform, maintaining the personal income tax helps ensure that the state’s tax system raises adequate revenue for investments in the building blocks of economic growth.

6 Comments

  1. Dallas H Woodhouse

    April 19, 2013 at 6:40 pm

    2.A heavy progressive or graduated income tax.

    directly from

    http://en.wikipedia.org/wiki/The_Communist_Manifesto

  2. gregflynn

    April 19, 2013 at 9:28 pm

    That has to be one of the saddest lamest comments ever. Is the NC Constitution also communist because the Communist Manifesto says “Free education for all children in public schools.”?

  3. Gene Hoglan

    April 20, 2013 at 12:10 am

    At least Doug puts some efforts in his misspelled, grammatically-challenged dreck. Step yo game up, son.

  4. Jack

    April 22, 2013 at 10:14 am

    The result of eliminating personal and corporate income taxes will be the implementation of an insidious taxation system that will devastate NC’s lower, fixed and all levels of middle incomes.

  5. Doug

    April 22, 2013 at 2:12 pm

    Gene,
    Actually that was not me in that first post. But I can’t say I disagree with it.

  6. Doug

    April 22, 2013 at 2:56 pm

    You should really get a true non partisan study out there that analyzes the same or similar premise. The guy in charge of this think tank was a Jimmy Carter guy. We know how well that guy guided the country. This blog post is basically useless propaganda for big government as it has been for so long.

    Guess you guys are going to be the conservatives before long what with being so beholden to the status quo.