For State Income Taxes, Average Is Over

Tyler Cowen says that “Average is Over.” That might be a good description of states’ individual income tax rates. The 2000s-era “typical” top rates of about 6 percent have given way to a starker divide between states with competitively low rates and states with high (and rising) top rates.

That’s the subject of my latest blog post for the Tax Foundation, which you can find here.

Whereas most states used to be in the broad middle, the new distribution is increasingly bimodal. So-called millionaires’ tax proposals in Michigan, Rhode Island, Virginia, and Washington would further widen the gap, as would—in the opposite direction—additional proposals for rate reductions in a number of states.

I typically use this newsletter either to write about something that doesn’t quite fit for publication through my normal channels or to expand on something I’ve written elsewhere, but today’s email is an extremely short one with nothing more than the goal of sharing my Tax Foundation analysis, which you can find here. I believe this trend is important enough to amplify in an email, as it has significant implications for the future of state tax competition.

Obligatory Marketing Note

My new consultancy provides tax policy research, writing, and other services, both project-specific and on retainer (or in visiting fellow-style roles). If you are in the market for tax policy research or know someone who is, please let me know.

Please Share this Substack

If you find this Substack valuable, please do me a favor and share it with colleagues and others who may be interested. And if you haven’t yet subscribed (it’s free), please consider doing so!