Significant Tax Reform Measures Under Consideration in 2013

2013

Following a relatively quiet year for tax activity, 2013 beckoned as “the year of tax reform” as governors across the country kicked off the legislative sessions with major tax reform proposals.

To date, only three states—Alaska, New Mexico and Virginia—have enacted tax reform measures, but another 31 and the District of Columbia report that significant tax reform measures are under consideration.


Tax Reforms Approved by the Legislature

  • Alaska lowered oil and gas production taxes, which is expected to reduce state revenues by about $500 million per year.
  • New Mexico made changes to the corporate income tax, reducing the rate over five years and moving to combined reporting requirements and a single sales factor apportionment formula for certain corporations.
  • Virginia adopted wide-ranging changes to the sales tax, gas tax and some local taxes and fees to address how state transportation is funded.

Reforms Still Pending

  • Arkansas lawmakers are considering several tax reduction bills including personal and corporate income tax reductions, modifications to sales tax exemptions and a reduction in the capital gains tax.
  • In Indiana, legislation is pending that would phase out the state inheritance tax, reduce the financial institutions tax rate, reduce individual income taxes and change sales tax nexus requirements relating to remote vendors.
  • Maryland, Massachusetts, Michigan and Vermont are considering tax reform measures that would generate new revenues for transportation and that would restructure the way transportation is funded in the future.
  • Missouri lawmakers are taking into consideration several bills that would generate new revenues for transportation, reduce personal and corporate income taxes, and increase the sales tax.
  • Pending legislation in Minnesota and Ohio would broaden the sales tax base by expanding into services. Minnesota is also considering a new tax rate on high-income earners, while the measure in Ohio is tied to an income tax reduction.
  • Reform measures focused on reducing personal income taxes are being looked at in Kansas, Louisiana, Nebraska, North Carolina, North Dakota, Oklahoma and Wisconsin.
  • Corporate income tax reductions have been discussed in North Dakota, Pennsylvania and Rhode Island.