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U.S. NEWS Wednesday 22 March 2023
States cranking out even more tax cuts amid cash surpluses

By DAVID A. LIEB retirees and to lower-in- Last October, Republican
Associated Press come families. Gov. Mike Parson signed
JEFFERSON CITY, Mo. (AP) And in West Virginia, Re- legislation cutting the top
— Just six months after publican Gov. Jim Justice individual income tax rate
passing what was billed as signed a measure passed from 5.3% to 4.95% effec-
the largest tax cut in Mis- by the GOP-led Legislature tive Jan. 1 and allowing
souri history, the Republi- that reduces the income for an eventual reduction
can-led state House voted tax rate while also enlarg- to 4.5% if revenues contin-
Tuesday for an even bigger ing an income tax credit ue to grow. This year’s bill
income tax cut that could to offset personal property doesn’t wait to see wheth-
return over $1 billion annu- taxes paid on vehicles. er that growth occurs. In-
ally to individuals, corpora- The tax cut package is ex- stead, it would cut the in-
tions and retirees. pected to return more than dividual income tax rate
The Missouri legislation is two-thirds of the state’s re- to 4.5% beginning in 2024
the latest in a series of ag- cord $1.1 billion surplus to while also reducing taxes
gressive tax reductions that taxpayers, as opposed to on corporations and Social
swept across U.S. states last spending it on state pro- Security benefits and en-
year and have continued grams. abling even more income Members of the Missouri House debate legislation cutting state
into 2023 — even as some Nationwide, states’ total fi- tax cuts if future revenue income taxes on Tuesday, March 21, 2023, at the state Capitol in
warn that it might be wise nancial balances reached targets are met. Jefferson City, Mo.
for states to hold on to re- a record $343 billion at Other states also are follow- Associated Press
cord large surpluses amid the end of their 2022 fiscal ing last year’s tax breaks a plan passed by the Re- on the heels of a tax over-
economic uncertainty. years — up 42% from the with even more this year. publican-led Legislature to haul passed last year,
“Wouldn’t it be a good previous year, according Kentucky Gov. Andy Bes- cut the state’s individual which lowered the income
idea for us to all just pause to a recent report by The hear, a Democrat up for income tax rate to 4% ef- tax rate from 5% to 4.5% in
for a year?” Democratic Pew Charitable Trusts. re-election this year, signed fective in 2024. That comes January.q
state Rep. Deb Lavender Two-thirds of states ap-
asked rhetorically before proved some sort of tax re-
her Republican colleagues lief last year, according to
endorsed the tax cut on a an analysis by The Associ-
109-45 party-line vote. ated Press.
The Missouri legislation still Those surplus-induced tax
has a ways to go — it needs breaks were enabled by
a second House approval stronger than expected
before it can move to the state tax collections and
Senate and then to the an influx of federal pan-
governor. But legislatures demic aid both directly to
and governors in several states and to businesses
states already have given and individuals that, in
final approval to tax cuts turn, injected more spend-
and rebates in the first few ing into the economy. But
months of this year. In some those federal payments
states, those tax breaks are winding down, inflation
have been pushed by Re- remains persistently high
publicans, but in others by and new challenges in the
Democrats. banking sector have raised
South Dakota Gov. Kris- questions about the overall
ti Noem, a Republican, economy.
signed legislation Tuesday “This extraordinary chapter
that will lower the state’s in state finances appears
sales tax for a four-year pe- to be coming to an end,”
riod, though she had origi- said Justin Theal, an officer
nally wanted the GOP-led with Pew’s State Fiscal Poli-
Legislature to eliminate the cy Project.
sales tax on groceries. “Tax cuts or new spending
In Montana, Republican initiatives aren’t inherently
Gov. Greg Gianforte last bad or uncommon during
week signed a $1 billion good budgetary times,”
package of bills passed Theal said. But “if policy-
by the GOP-led Legisla- makers aren’t careful,
ture that will provide both these long-term commit-
income and property tax ments can place them in a
rebates, reduce the top more vulnerable fiscal posi-
income tax rate and in- tion when the economy in-
crease income tax credits evitably turns.”
for lower-income working In Missouri, some Repub-
families. lican lawmakers argued
In Michigan, Democratic that more tax cuts ultimate-
Gov. Gretchen Whitmer ly would give residents
signed a bill passed by the more money to spend and
Democratic-led Legislature lead to continued growth
that provides tax relief to in state tax revenues.