BTC BRIEF: Tax Policy Choices Continue to Constrain Opportunities for Progress Today

By Alexandra F. Sirota

BTC Director

February 2017

The upcoming biennial budget debate will be the first one since all of the tax changes written into statute in 2013 have gone into effect, and budget writers will once again feel the constraints of a state tax code that fails to support smart public investments that allow all communities in the state to thrive. 
 
The final tax change from 2013 was the reduction of the corporate income tax rate from 4 to 3 percent on January 1, 2017, which will annually reduce the dollars available to the state by $500 million. Subsequent additional cuts to the personal income tax rate passed in 2015 will mean that rate also dropped this year from 5.6 to 5.499 percent.
 
Policymakers face a self-imposed challenge of meeting the needs of a growing population, a changing economy and an opportunity infrastructure that fails to reach every community and neighborhood in the state. The decision to reduce revenue that could have been invested in schools, affordable housing, health care, and community economic development has had a cumulative effect on the ability of families and communities to get ahead. 
 
 
 
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