State Fiscal New Year and Latest State Tax Cut Efforts: Jonathan Williams on American Radio Journal
ALEC Executive Vice President of Policy and Chief Economist Jonathan Williams highlights the wave of tax relief some states are providing taxpayers in his latest American Radio Journal commentary on states cutting taxes.
This week closed the books on most state legislative sessions and was an incredible 2023 for hardworking taxpayers. In recent years, we’ve seen significant income tax relief in the States, notably 10 states, Kentucky, West Virginia, Montana, Utah, Arkansas, North Dakota, Indiana, Nebraska, Connecticut, and Ohio, to cut personal income taxes in this year alone. With the new addition of West Virginia, North Dakota and Connecticut, the total number of states cutting taxes since 2021 is now 24 with several of these states cutting taxes multiple times during that period.
Despite economic turmoil caused by the COVID-19 pandemic and lockdowns, many states have found themselves flushed with cash, especially as their academies begin to reopen. Some of the budget largess can be directly traced back to trillions of federal money pumped into state economies, some directly infused into state budgets. States are facing a long-term trap with the so-called free federal aid. As the great economist Milton Friedman would always say there is no such thing as a free lunch.
But apart from the federal funds, state tax revenues naturally returned to normal, but in most cases even exceeded previous growth trends. Since 2021, most states have seen healthy surpluses fueled by abundant tax revenue, and in many cases are using that surplus to enact substantial tax relief for their taxpayers. Taxpayers in several of the states have seen tax relief multiple times in recent years.