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1 Jared Walczak, Tax Trends Heading into 2019 1 (2018)

handle is hein.taxfoundation/txtrhd0001 and id is 1 raw text is: FISCAL FACT No. 628 Dec. 2018 The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and local levels. We are a 501(c)(3) nonprofit organization. ©2018 Tax Foundation Distributed under Creative Commons CC BY NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org Tax Trends Heading Into 2019 Jared Walczak Senior Policy Analyst Key Findings State tax changes are not made in a vacuum. States often adopt policies after watching peers address similar issues. Several notable trends in tax policy have emerged across states in recent years, and policymakers can benefit from taking note of these developments. The enactment of the federal Tax Cuts and Jobs Act (TCJA) expanded many states' tax bases and drove deliberations on tax conformity. At year's end, only five states conform to an older version of the federal tax code, though many have yet to resolve issues raised by their tax conformity regimes. Several states experimented with mechanisms to allow their high-income taxpayers to avoid the new cap on the state and local tax (SALT) deduction, efforts cast into doubt-though not entirely ended-by draft U.S. Treasury regulations. Three states and the District of Columbia cut corporate taxes in 2018, with rate reductions pending in two other states. Reductions in other taxes on capital are ongoing as well, with Mississippi beginning the phaseout of its capital stock tax. The U.S. Supreme Court's Wayfair v. South Dakota decision ushered in a new era of sales taxes on e-commerce and other remote sales, but many states have yet to implement the provisions the Court strongly suggested would protect such tax regimes from future legal challenges. A second state (Arizona) adopted a constitutional amendment banning the expansion of the sales tax to additional services, with similar efforts-which have the effect of locking an outdated sales tax base in place-expected to emerge in other states in 2019 and beyond.

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