As States Recover From Great Recession, Talk of Tax Reform, Adjustment to a ‘New Normal’ for Spending Begins to Take Hold

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

For states, the lingering effects of the recent recession mean that budget shortfalls will continue to be a concern in 2012 even as revenues recover. In an election year, conventional wisdom holds, legislators are generally loathe to address tax issues. But fundamental tax reform will surely be a point of discussion in 2012 as states are forced to confront deficits that can only be addressed by a restructuring of taxing systems. In the interim, states will continue to look for ways to close the tax gap—through stepped-up enforcement, the pursuit of administrative efficiencies, and enactment of “click-through” nexus laws. Momentum also appears to be building for Congress to at last take action on a federal streamlined sales tax bill that would grant states the authority to require online retailers to collect and remit sales tax.