As 2016 fast approaches, I have some suggestions for those responsible for state tax policies. These suggestions will make the tax system -- and indeed, the government -- fairer, more transparent, and more efficient. And they should be issues that both Democrats and Republicans agree on. Here they are:
1. Adjust the system for inflation. Only half the states fully index their income tax brackets to inflation. That hurts everyone, particularly low-income residents. Moreover, many states do not index their standard deduction or personal exemptions to inflation. Without indexing, citizens pay higher taxes, often without real income increases and without any legislative action. If your state has an income tax, make sure it is indexed to inflation.
3. Install an independent tax tribunal. It amazes me that only half the states have a system of adjudicating tax disputes that isn't run by the revenue department. There is nothing fair about an administrative law judge who is deciding your case also working for the same guy who's prosecuting your case. If your state doesn't have an independent tax court, fight for one. And while you're at it, fight for a system that doesn't require payment of alleged liabilities before challenging a deficiency.
4. Oppose tax incentives. I know -- incentives are seemingly invulnerable in our political system. But the difficulty of the task should not deter the righteous. Tax incentives violate every principle of sound tax policy. They are unnecessary. They are unfair. Liberals should hate them because they waste money that could be used for schools and healthcare. Conservatives should hate them because they are the antithesis of a free market.
5. Fight for greater transparency. As an employee of Tax Analysts, I would be remiss not to encourage greater openness on the part of state governments in tax practice and policy. We should encourage as much guidance as possible. We should ensure that all judicial opinions are released to the public. We should strive to make all administrative determinations available to the public. An ounce of secrecy when it comes to taxes is too much.