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

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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
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©2018 Tax Foundation
Distributed under
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Editor, Rachel Shuster
Designer, Dan Carvajal
Tax Foundation
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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      have the effect of locking an outdated sales tax base in place-expected to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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