Changes in state tax structures: true comprehensive reform or artifacts of incrementalism?

Changes in state tax structures: true comprehensive reform or artifacts of incrementalism?

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Article ID: iaor2005427
Country: United States
Volume: 16
Issue: 1
Start Page Number: 109
End Page Number: 136
Publication Date: Jan 2004
Journal: Journal of Public Budgeting, Accounting and Financial Management
Authors: ,
Keywords: management, economics, government, politics, statistics: empirical
Abstract:

Using data obtained from the National Conference of State Legislatures, we investigate modifications in state tax codes to determine their characteristics, the apparent trends of state tax reform, and whether changes constituted comprehensive reform or mere incremental adjustments to existing tax structures. Based on the data, we find that few states achieved comprehensive tax reform in the 1990s despite the fiscal surplus that provided an environment conducive to widespread change. Moreover, we find that a significant number of changes that were enacted in the 1990s involved increases or decreases in state tax revenue that were ultimately tied to economic cycles. We suggest that adequacy in state tax collections may be the most common tax principle adhered to with regard to changes in tax structure. We also conclude that reform efforts in the 1990s were most successful when approached in an incremental fashion in the absence of a significant precipitating reform driver.

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