State Tax Snapshot: Single-Party Control Has Uneven Effect on Tax Reform

Many believed that the stage was set for significant tax reform following the 2012 election, which saw a single party wrest control of both chambers of the legislature as well as the governor's office in several states.

But results among the states have tended to vary. North Carolina, in which the Republicans control both the Legislature and Governor's office for the first time since Reconstruction, saw the enactment several important tax changes in 2013. For example, the state lowered personal and corporate income tax rates for the 2014 and 2015 tax years.

However, single-party control has had little impact on several other states, noted Joseph Henchman, vice president with the Tax Foundation at the Bloomberg BNA State Tax Advisory Board Roundtable in August.

For example, Nebraska has a Republican legislature and a Republican governor, but they have other factions, he said. Perhaps it was these internal divisions that forced Nebraska Gov. Dave Heinman to scrap his proposal to lower or replace the state’s income tax with an expanded sales tax. “In states where you have one party control, to a certain degree, then you start getting other ways that people divide themselves up into factions and that gums things up,” Henchman said.

On the other end of the political spectrum is the District of Columbia, which is entirely controlled by Democrats. But “there are reformed Democrats and, shall we say, nonreformed Democrats and that changes the political dynamic more than just looking at party labels would suggest,” Henchman said.

Henchman’s comments were made during the Bloomberg BNA State Tax Advisory Board Roundtable in which prominent state tax experts discussed the latest trends in state taxation. The participants discussed key court decisions, sales taxes, income taxes, unclaimed property, and the future of the Multistate Tax Commission Compact. A special report containing a full transcript of the discussion along with additional background information will be published Sept. 27.

By Steven Roll

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