ITEP in Action
The Institute on Taxation & Economic Policy (ITEP) has engaged in research on tax issues since 1980, with a focus on the distributional and revenue consequences of both current law and proposed changes. ITEP’s timely, accessible and accurate analyses help inform policymakers, advocates, the media and the general public about the fairness, adequacy and sustainability of proposed changes to federal, state and local tax systems
ITEP’s work is especially critical because most state governments lack the capacity to provide this important information to their own lawmakers—and because even the federal government does not routinely make this capacity available to policymakers. ITEP tax policy analysts’ pro bono work on behalf of lawmakers and other stakeholders fills an informational void, and helps to ensure that lawmakers will be able to make important tax policy decisions based on hard facts.
Much of ITEP’s work involves using its own microsimulation tax model which has the unique capability of analyzing the tax systems of all fifty states, the District of Columbia, and the federal government. The ITEP model is capable of calculating how taxpayers at different income levels are affected by the current tax system and under proposed changes. The model can also project potential revenue yields of tax law changes. For more information on ITEP’s model, visit About the ITEP Microsimulation Model.
ITEP’s research is frequently cited in the press and used by other organizations in their work. ITEP is also often consulted by government estimators in performing their official analyses. A sampling of ITEP’s work in action can be found below:
“In 2012, Kansas enacted one of the largest tax cuts of any state ever … The impact of the 2012 cuts was uneven as a share of income. The cuts saved the wealthiest 1 percent the most, as a share of their income, according to an analysis by the Institute on Taxation and Economic Policy and reproduced by CBPP. Only one group saw taxes eat up a larger share of their income: the bottom fifth.”
-- Niraj Chokshi, The Washington Post, March 27, 2014
"These job totals don’t include the nice work that has gone to all those economists cranking out studies warning that tax incentives make for bad investments. Just three months ago, the non-profit, non-partisan Institute on Taxation and Economic Policy released yet another study warning that “despite the enormous expenditures being made on these programs, the evidence suggests that tax incentives are of little benefit to the states and localities that offer them, and that they are actually a drag on national economic growth.”
-- Fred Grimm, Miami Herald, December 9, 2013
"Eight states increased their gas tax this week, according to a report from the Institute on Taxation and Economic Policy. The largest boost was in Wyoming, which raised its gas tax by 10 cents a gallon, followed by Connecticut, California, Maryland, Kentucky, Nebraska, Georgia and North Carolina."
-- Wenqian Zhu, CNN Money, July 2, 2013
"Instead of asking if a preference is necessary, some states are starting to ask, “Is this preference working?” This approach calls for independent experts to supply legislators and citizens with objective evidence on what preferences accomplish and at what cost. This is the reform strategy preferred by many experts on state tax policy, including the nonpartisan Institute on Taxation and Economic Policy (ITEP)."
-- Justin Marlowe, Governing, April 2013
The numbers released in February by ITEP show that the top one percent of Ohio taxpayers, with a mean income above $335,000, would save an average of $10,369 each year….ITEP further asserts that Kasich’s proposed tax reform would typically result in a net loss for Ohioans making up to $51,000 each year. But how did ITEP get its numbers? The non-profit said it uses an elaborate microsimulation tax model that calculates the impact of changes to current tax law at the federal and state level. Among the stratified data used in the model are a large sample of federal tax returns, Bureau of Labor Statistics Consumer Expenditure Surveys and Census Bureau American Community Surveys, they said. The New York Times has lauded the credibility of the model and Bloomberg has used the model’s calculations as reporting tools.”
-- PolitFact Ohio, Cleveland Plain Dealer, March 8, 2013
While lately, some states with no income taxes such as Texas have done better in terms of jobs and growth than high-tax states such as California, it would be a mistake to look only at very recent trends and to ignore other explanations for changes in the economy, jobs and population. According to the Institute on Taxation and Economic Policy, there has been little relationship between state growth rates and state income tax burdens over the last decade.
-- Bruce Bartlett, The Fiscal Times, February 22, 2013
The two-year spending plan calls for a state income tax cut averaging $106 for a family of four earning $80,000 a year. That's about $2 per week. For low-income taxpayers, the cut is even more miserly: An estimated $2 a year for those earning less than $21,000, according to an analysis by the Institute on Taxation and Economic Policy done for the Wisconsin Budget Project. That analysis also showed the wealthiest taxpayers, those earning $374,000 or more, would see a cut of $285.
-- Dee J. Hall, Wisconsin State Journal, February 22, 2013
A study by the Institute on Taxation and Economic Policy, a nonprofit research group in Washington, found that nearly all the decline in millionaires was the result of a drop in incomes largely attributable to the stock market plunge and recession, and not to migration — “down and not out,” as the study put it.
-- James B. Stewart, The New York Times, February 15, 2013
Most states do not routinely raise their gas taxes, we learned after consulting a September 2012 report by the Federal Highway Administration and a December 2011 study by the Institute on Taxation and Economic Policy. Excise gas taxes regularly increase in 14 states. That’s because they have variables in their tax rates that periodically rise with inflation or the price of gas.
-- Politifact Virginia, Richmond Times-Dispatch, February 11, 2013
Sixteen states haven't raised gasoline taxes in 20 years or more, according to the policy think tank Institute on Taxation and Economic Policy… [ITEP] recommends linking, or indexing, state gasoline taxes to the rate of growth in the costs of concrete, steel and other infrastructure components.
-- Larry Copeland, USA Today, January 24, 2013
During the [Indiana gubernatorial] campaign, the Institute on Taxation and Economic Policy found more than half the benefits of the rate cut would flow to the best-off 20 percent of Indiana residents. The nonprofit, nonpartisan research organization is based in Washington, D.C., and analyzes federal, state and local tax policy. According to the group’s report, if Pence’s rate cut had been in effect last year, a typical middle-income Indiana resident would have seen their taxes fall by about $102, while the state’s richest 1 percent of taxpayers would have received an average tax cut of $2,264.
-- Niki Kelly, The Fort Wayne Journal Gazette, January 23, 2013
With the tax burden of both measures falling largely on Californians who make more than $500,000 per year, deciding how to spend that money is the real difference between the measures, said Meg Wiehe, state tax policy director for the nonprofit and nonpartisan Institute on Taxation and Economic Policy…Under both measures, the top 1 percent of earners would bear most of the burden, according to the Institute on Taxation and Economic Policy, which has estimated what the increase will cost people in different income groups…The analysis found that for people making more than about $530,000 per year, taxes under Prop. 30 would increase by nearly $22,000 annually and under Prop. 38 the annual increase would be about $23,000.
-- Wyatt Buchanan, The San Francisco Chronicle, September 22, 2012
The effects of state taxes are hotly debated … the Institute on Taxation and Economic Policy, a nonprofit research organization in Washington … issued a report this year that found that the states with high income tax rates had outperformed those with no income tax over the past decade when it came to economic growth per capita and median family income.
-- Michael Cooper, The New York Times, July 10, 2012
Governors seeking to expand their economies by eliminating income taxes find little support for the idea in the record of U.S. states that lack such a levy. … the nine states with the highest personal income taxes on residents outperformed or kept pace on average with the nine that don’t tax their residents’ incomes, according to a study of economic output, unemployment and household income by the nonpartisan Institute on Taxation and Economic Policy.
-- Brian Chappatta, Bloomberg, June 25, 2012
On eve of the Senate debate, the non-partisan Institute on Taxation and Economic Policy in Washington, D.C., offered an assessment indicating the tax bill would increase taxes on 20 percent of Kansans making less than $20,000 per year by an average $86. At the same time, the institute said, the top 1 percent of Kansans based on income would receive an average tax cut of $19,000.
-- Tim Carpenter, The Topeka Capitol Journal, May 9, 2012
An analysis by a nonprofit tax-policy institute says that Maryland and Virginia could have collected hundreds of millions of dollars per year since their last gas-tax increases if they had raised the tax regularly to account for inflation. The states, both of which are desperately trying to cobble together more money for transportation, had among the highest totals in the nation of unimposed gas-tax dollars, according to the D.C.-based Institute on Taxation and Economic Policy.
-- Dan Sherfinski, The Washington Times, December 14, 2011
No further tax cuts are in the offing for the foreseeable future, so Oklahoma’s tendency to tax lower-income citizens disproportionately is also unlikely to change any time soon. The state is rated as having an exceptionally regressive tax system by the Institute on Taxation and Economic Policy (ITEP), which says low- and moderate-income Oklahomans surrender a greater portion of their incomes to taxes than those with higher incomes.
--The Oklahoman Editorial Board, November 22, 2009
A study by a Washington think tank [ITEP] on tax distribution in all 50 states … concluded that Michigan's tax system is horribly regressive when you look at overall tax burden on families… The study provides important context for the debate about how to fix Michigan's finances
-- Detroit Free Press Editorial Board, November 20, 2009
"In all of Washington, there are three computer models built to produce what are called distributional tables--showing how any particular tax increase or tax cut would be distributed among various income levels. One model is the Treasury Department, one is at Congress's Joint Tax Committee and one is at Citizens for Tax Justice... whose numbers are completely reliable."
-- The New York Times. Sunday, March 4, 2001 (referring to the ITEP model as the source of CTJ analyses)
Visit ITEP in the News for a complete list of press featuring ITEP analysis.
- Minnesota Department of Revenue: 2015 Minnesota Tax Incidence Study
- Tennessee Comptroller of the Treasury: Tennessee Transportation Funding
- D.C. Tax Revision Commission: Final Report
- New York State Tax Reform and Fairness Commission: Final Report
- The White House: Fixing Our Broken Immigration System
- Public Finance Review: Voter Ideology, Economic Factors, and State and Local Tax Progressivity
- State of Hawaii Tax Review Commission: Study of the Hawaii Tax System, Final Report
- Kentucky Governor’s Blue Ribbon Commission on Tax Reform: Taxation Boot Camp
- Louisiana Department of Revenue and Louisiana Economic Development: Primer on State Tax Structure in Louisiana
- Maryland Governor Martin O’Malley’s Office: Key Stats on Balanced Revenue
- Massachusetts Governor Deval Patrick’s Office: FY14 Budget Testimony
- National Conference of State Legislators (NCSL): On the Move: State Strategies for 21st Century Transportation Solutions
- National Tax Journal: Millionaire Migration and State Taxation of Top Incomes- Evidence from a Natural Experiment
- Political Economy Research Institute: Raising Revenue from High-Income Households
- South Carolina Taxation Realignment Commission: Final Report
- State Budget Crisis Task Force: Full Report
- Wisconsin Department of Revenue: Governor Walker’s Tax Reform Initiative
For a complete list of reports using ITEP data, visit Reports Using ITEP Data.
“The flourishing of the research by ITEP … is evidence for the proposition that academia does not sufficiently address distributional issues in state and local tax and expenditure policy. As a tax official, if I wanted nationwide information on the distribution of state and local taxes by income class, I would go to ITEP, not academic journals or state-level academic experts.”
-- Dan Bucks, former director of the Montana Department of Revenue, September 26, 2016
“Given the questions raised about how Minnesota compares to other states, this section summarizes the results of a 50-state study of state and local tax incidence. That study, entitled Who Pays? A Distributional Analysis of Tax Systems in All 50 States (5th Edition), was published by the Institute on Taxation and Economic Policy (ITEP) in January 2015. It uses a methodology that is relatively close to what is used in this study. The ITEP study is of high quality.”
-- Minnesota Department of Revenue, March 2015
“Spending on transportation and education is what supports job growth, not lower taxes for the sake of lower taxes. Last month, the non-partisan Institute on Taxation and Economic Policy issued a report evaluating the economic growth per capita of several states. The report compared nine states with relatively high income taxes to nine states with low or no income tax. The analysis made clear that the nine states with “higher” income taxes actually saw considerably more economic growth per capita than the nine states with low or no income tax. The states with no income tax have seen a decline in median income.”
-- Massachusetts Governor Deval Patrick, Testimony at Joint Committee on Ways and Means FY14 Budget Hearing, March 8, 2013
“The ITEP “Who Pays” report is among the most important and valuable analyses of the current state tax system.”
-- David Brunori, George Washington University Professor and State Tax Analysts contributor. State Tax Analysts, February 6, 2013.
“ I recently became aware of a new study, by the Institute on Taxation and Economic Policy, which confirms the Department of Revenue’s analysis. It found that middle-class Minnesotans pay 26 percent more state and local taxes per dollar of income than do the top one percent of our state’s income earners. When people who have the most pay the least, this state and nation are in trouble. When lobbyists protect tax favors for special interests at the cost of everyone else’s best interests, this state and nation are in trouble. My goal is to get us out of trouble.”
-- Minnesota Governor Mark Dayton, State of the State Address, February 6, 2013
“The highly respected and independent Institute on Taxation & Economic Policy is considered a definitive authority on the study of tax burdens in the United States and within each state. Their latest report was released in November 2009 … [and shows that] … in Connecticut we’ve managed to develop an almost perfectly regressive tax system. The less you make, the higher your tax burden. The more you make, the lower your tax burden. Now that we understand the reality about Connecticut’s tax structure, we can begin to have a reasonable discussion about what to do next.”
-- Jonathan Pelto, former member of the Connecticut House of Representatives
CT News Junkie, Jan 8, 2010