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1 Jared Walczak, Trends in State Tax Policy, 2018 1 (2017)

handle is hein.taxfoundation/trendsxp0001 and id is 1 raw text is: FISCAL FACT No. 568 Dec. 2017 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) non profit organization. ©2017 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 Trends in State Tax Policy, 2018 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. Four states cut corporate income taxes in 2017, three as part of planned multiyear reductions, and one (North Carolina) as a further rate reduction after the successful implementation of multiyear reforms. States continue to reduce other taxes on capital as well, with New York continuing a multiyear phaseout of its capital stock tax and Mississippi about to embark on its own phaseout. Four other states have repealed theirs since 2015. Tax incentive evaluation laws continue to take hold as states grapple with narrowing tax bases. Gross receipts taxes are being contemplated in a growing number of states as corporate income tax revenues decline, though concerns about their economic effects have generally helped stave off their adoption. As e-commerce's share of total retail sales continues to rise, states are mounting increasingly energetic efforts to tax remote sales through indirect and direct challenges to current case law. As public attitudes have shifted, states are increasingly viewing the legalization of recreational marijuana as fiscal as well as social policy. Three states legalized and taxed recreational marijuana in 2017, and there is a growing emphasis on setting tax rates low enough to drive out the black market. Two states (Delaware and New Jersey) are in the process of repealing their estate taxes, while two others and the District of Columbia raised exemption thresholds, continuing a decade-long trend away from taxes on estates and inheritances. Many states put off major changes to their tax codes this year due to uncertainty about federal tax reform. Should a tax reform bill be adopted at the federal level, this will create both challenges and opportunities for states, which should drive much of the state tax reform conversation in 2018.

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