When it comes to state income taxes, there’s a significant debate about their role and impact. Currently, nine U.S. states do not have an income tax. In contrast, 14 states have a flat tax rate, while 27 have graduated rates similar to the federal tax system.
In this installment of “State of Play,” a bipartisan video series created by A Starting Point and NCSL, Washington Rep. April Berg (D) and Arkansas Rep. Carlton Wing (R) discuss state income taxes. Berg highlights the importance of a balanced tax system, likening it to a stool with multiple legs: income, property and sales taxes. Without all these elements, she argues, states risk an imbalanced and regressive system. She believes that a more progressive tax code, where higher earners pay more, could alleviate burdens on working families.
Wing, on the other hand, acknowledges the appeal of eliminating income taxes but warns of potential consequences. He explains that while reducing taxes seems beneficial, it could lead to cuts in essential services unless alternative revenue streams are found. Wing emphasizes the need for robust discussions involving diverse voices to ensure tax policies address economic needs without overburdening citizens.
Both representatives agree that fairness and balance are crucial. Berg stresses that higher earners should contribute a fairer share, while Wing advocates for tax policies that stimulate economic participation without stifling growth.
Watch the full video now.