Weekly Round-Up: No Tax Hikes on Horizon (Except for N.Y. Millionaires)

The past year saw most states keep their tax rates the same,reduce them (e.g.,Indiana),or implement major reforms (e.g., Michigan). Two major exceptions were Connecticut and Illinois, which both enacted tax increases.

New York recently followed the tax reduction trend by cutting the rates applicable to most tax brackets beginning in 2012. But,while doing so, the state also raised the rate applicable to its wealthiest earners.

Massachusetts announced that it was cutting its personal income tax rate from 5.3 percent to 5.25 percent beginning in 2012. Therate change was prompted by tax revenue growth.

It looks like few states will enact rate hikes in 2012. Hawaii's governor said this week that his budget will not include a tax increase. Mississippi's governor pledged to cut spending by about 3 percent from last year.

Illinois appears to be backtracking from its decision to raise rates in 2011. It recently enacted legislation that significantly cuts the tax burden for CME Group and Sears Holding Corp., two of the largest employers in the state.

One factor is similar to the debate taking place in Congress.Earlier this year, a story in Stateline noted that about 13 governors and 1,262 state legislators have signed a pledge with the Americans for Tax Reforms to not raise taxes.

In other developments…

The Council on State Taxation rebuts a Citizens for Tax Justice Report claiming that major corporations are paying less than their fair share of state taxes.

KPMG's quarterly state tax publication TWIST-Q, features a comprehensive checklist of important state tax developments taking place in 2011.

By Steven Roll

Follow us on Twitter at: @SALTax
Join BNA's State Tax Group on LinkedIn here: http://www.linkedin.com/groups?gid=1821701&trk=hb_side_g