REPUBLICAN GOVERNORS’ PLANS FOR NO STATE INCOME TAX LAUDED

Fox News on January 19, 2013, reported that several Republican governors are proposing an end to their state income taxes in exchange for closing loopholes including mortgage deductions — plans to make their states more competitive in the U.S. economy. Excerpts below:

Gov. Dave Heineman, Nebraska, and Bobby Jindal, Louisiana, earlier this week proposed eliminating the tax on residents and corporations.

Meanwhile, Kansas Gov. Sam Brownback proposed lower taxes for all residents in exchange for eliminating the tax deduction for interest paid on home mortgages.

Brownback’s mortgage-interest proposal is to help close a budget shortfall and was rejected last year by the state’s General Assembly.

He has been working for at least a year toward ending state income taxes and announced his plan Tuesday as part of his balanced budget proposal for fiscal 2014 and 2015.

Alaska, Texas, Florida, Nevada, South Dakota, Washington and Wyoming have no individual income taxes. Nevada, South Dakota and Wyoming have no corporate income taxes, according to the nonprofit Tax Foundation.

Brownback wants to drop the tax rate for the lowest earners from 3 percent to 2.5 percent, then to 1.9 percent in fiscal 2016. The top rate would go from 4.9 percent to 3.5 percent by 2017.

“Part of the governor’s proposal includes taking the next step on the state’s path to no state income tax,” the governor’s office said.

His proposals, including other real estate deductions, provide an additional $541 million in revenues for the fiscal year beginning July 1.

Brownback’s office also vowed the “glide path to zero” would not increase the sales tax nor include cuts to schools, higher education and essential safety-net programs.

Chris Edwards, director of tax policy studies at libertarian-leaning Cato Institute said Saturday that he supports the idea of states going to one major tax — either income or sales.

“It helps citizens understand government,” he told FoxNews.com.

Edwards said the “worst” state taxes are those on corporations because of compliance issues and that eliminating them would be a good idea.

Jindal wants to take the state’s personal income tax rate from 3.9 percent to zero.

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