Major Income Tax Cuts Enacted And Advanced In Slew Of GOP-Run States
Kansas state capitol in Topeka
Lawmakers in multiple states have passed significant income tax rate cuts in recent weeks. Mississippi lawmakers and Governor Tate Reeves (R) enacted legislation in March that will phase out the Magnolia State's 4% income tax over time based on revenue triggers. Shortly thereafter, Kansas lawmakers followed suit by overriding a gubernatorial veto to enact income tax relief that moves the state tax code to a lower, flat rate.
Kansas Senate President Ty Masterson (R) and Speaker Dan Hawkins (R) led the charge for Senate Bill 269, legislation enacted this week that will move Kansas from a progressive income tax code with a top rate of 5.58% to a 4% single rate income tax. Kansas lawmakers passed this income tax cut at the end of March and Governor Laura Kelly (D) vetoed it on April 10. On April 15, Kansas lawmakers enacted SB 269 by voting to override Governor Kelly's veto.
SB 269 includes a revenue trigger resulting permanent rate cuts whenever a stipulated level of revenue collection is exceeded. Under 269, all surplus revenue collections exceeding growth in regional CPI inflation will be returned to taxpayers in the form of permanent income tax cuts until the rate falls to 4%. The tax reform package championed by Masterson and Hawkins also cuts the state corporate tax rate to 4% based on revenue triggers.
Many in South Carolina hope their state is the next to enact rate-reducing income tax reform. Speaker Murrell Smith (R) and his colleagues introduced legislation in March to move the state from a progressive income tax with a top rate of 6.2%, to a flat 3.99% income tax.
An economic impact study recently released by the Palmetto Promise Institute and the Buckeye Institute concluded that moving to a lower, flatter rate would come with many benefits for South Carolina residents and the state's economy.
'Broadening the base and moving to a flat rate of 3.99% will result in South Carolina's economy adding 1,000 jobs in 2026 and an average of 1,000 additional jobs each year between 2027 and 2030,' noted Oran Smith, senior fellow at the Palmetto Promise Institute. 'South Carolina's GDP will grow by $240 million in 2026 and average $250 million over the next 5 years, if the tax rate stays at 3.99%. Families will buy more because, they will have more money to purchase goods, and save and invest over $100 million annually each year over the next five years.
'Dynamic economic modeling, which considers how people and businesses respond to policy changes, shows that this tax plan will make South Carolina a more prosperous state and poised to compete with neighboring states that have already enacted tax policy reform over the past few years,' Smith added. 'The scenario below models collapsing all current personal income tax brackets in South Carolina into a single bracket with a flat rate of 3.99%. Table I below presents the dynamic effects of this scenario. Under this scenario, South Carolina's economic output (GDP) would increase by $240 million (2024 dollars) in 2026, with investment increasing by $110 million and consumer spending increasing by $70 million in the same year. Ultimately, the number of jobs for 2026 would be expected to increase by 1,000.'
At the March 18 press conference announcing the Speaker's tax reform proposal, Governor Henry McMaster (R) and South Carolina Senate leaders announced that they, like Speaker Smith and his colleagues, see income tax rate reduction as a top priority to pass before adjourning session in May.
The South Carolina House Ways & Means Committee will hold a hearing next week to take up the Speaker's tax reform bill and consider amendments. If they're successful, South Carolina will soon have a lower rate than neighboring Georgia and will be on more competitive footing relative to North Carolina.
Underscoring the heightened level of state tax competition, North Carolina lawmakers took action this week to increase their fiscal policy advantage over South Carolina, Georgia, and other states. The North Carolina Senate passed a new budget on April 17 that would take the state's 4.25% flat income tax down to 1.99%, provided certain revenue triggers are met. Under current law, North Carolina's income tax rate will fall to 3.99% and possibly as low as 2.49% so long as revenue triggers are met.
Like their counterparts in North Carolina, the Oklahoma Senate approved income tax relief this week. On April 14, the Oklahoma Senate passed House Bill 1539, legislation that phases out the state income tax entirely over time based on revenue triggers being met.
Oklahoma currently has a progressive income tax with a top rate of 4.5%. If the Oklahoma House votes to concur with the changes made by the state senate, the bill will go to Governor Kevin Stitt (R) for his signature. Governor Stitt has long been a champion of phasing out Oklahoma's income tax.
'There are nine states with no state penalty on work,' said Oklahoma Sen. Micheal Bergstrom (R-Adair). 'Consistently, they're experiencing better growth and opportunity, and this is not a surprise. When you don't penalize work and job creation in the form of state income taxes, your citizens are better positioned to pursue opportunity for themselves and to expand opportunity for others.'
National media outlets have published multiple articles in recent days and weeks alleging that Republican members of Congress are warming up to the prospect of allowing the top marginal federal income tax rate to go up for filers whose income exceeds some amount. On April 17, however, Kimberley Strassel reported in the Wall Street Journal that the push to raise the top marginal income tax rate is being led by certain White House staffers, which Larry Kudlow has also reported. While some advisers may be trying to convince the President to break a well documented campaign promise by raising the top federal income tax rate, Republican state lawmakers across the country are going in the other direction, taking action to reduce top rates, move to flatter income tax codes, and ultimately end state taxation of household earnings.
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Preston Neuhaus completed his shift around 2 a.m., when Nathan returned to the Senate floor. Senate pages continued working until Booker finished at 8:05 p.m. the next day. 'Just the feel in the room was something that (had) never occurred,' Nathan told the Deseret News inside the Capitol rotunda, just hours after he finished his five-month long service. 'Like, for the whole gallery to be full and everybody on the floor, Republicans and Democrats, to stand up and clap together — it was really cool to witness just the kind of bipartisanship, and just see history occur,' he said. Since 1829, teenagers have served as pages in the Senate in some capacity, helping senators with their work. In the current-day program, high school students from across the country leave home and move to a dorm in the nation's capital where they get to experience American democracy up close. Thirty teenagers are chosen for each five-month session — 16 dedicated to the majority party, 14 assigned to the minority — and each student must be sponsored by a senator in order to be considered for the program. For example, Nathan and Preston, who are from Tennessee, were sponsored by Sen. Mike Lee of Utah. The high school pages are supervised by the sponsor's staff, allowing the students to interact with senators throughout the day. That interaction, both said, allowed them to see a side of lawmakers that most others don't get to see. 'Of course, people see (Lee's) policies and his beliefs and form their opinion over that,' Nathan said. 'But like, when you really get to know a lawmaker on a personal level, you really see how they care about certain issues and it changes your perspective on things.' Nathan and Preston said they enjoyed getting to know Lee over the five-month period, pointing out several parallels between them and Utah's senior senator. For example, Lee himself worked as a Senate page when he was in high school. And Lee graduated from Brigham Young University, where Nathan and Preston will attend in the fall. 'The Senate page program is a time-honored tradition, where bright young men and women can see their representative government in action and assist us in serving the American people,' Lee told the Deseret News in a statement. The twins also expressed admiration for Lee for serving a two-year mission for The Church of Jesus Christ of Latter-day Saints, of which both siblings are members. The pair attended church throughout the five-month program, often checking out from their dorm building to visit with their older brother who lives in Washington, D.C., attend his ward services, and eat lunch before returning later that afternoon. 'They were very willing to help ... and they made a lot of exceptions,' Preston said. 'It was just really refreshing to have a break at the end of the week and then just get ready for the next week.' High school students across the country can participate in the official Senate Page Program, which allows teenagers to play a crucial role in the daily operations of the U.S. Senate. Pages are responsible for delivering legislative materials between the Capitol and Senate office buildings; passing notes between senators on the floor; greeting senators on their way to the chamber; supporting senators and staff during debates; and assisting Capitol staff with updating the roll calls. The students are divided into four shifts throughout the day, with about seven to eight pages assigned to any given shift. Those shift assignments are 'who you're with all day, every day,' according to Preston. Pages must also adhere to a strict code of conduct and guidelines. One of the most significant: Pages cannot use their cellphones during the program, with limited exceptions for weekend travel or planned vacations. Students also don't have access to social media and are prohibited from posting about the program while they are enrolled. Instead, pages have landlines in their rooms to keep in contact with friends and family when their shifts are over. Landlines are then deactivated after 10 p.m. 'to ensure that all roommates get adequate sleep without interruption,' according to the program website. 'For me, it required a lot more effort to maintain relationships,' Nathan said. 'You don't have social media to see … what your friends are up to, what your family is up to, or you can't just call them or text them whenever.' 'It was definitely very difficult to maintain those relationships,' he added. 'But also, for me, it kind of brought out the ones that really mattered, because the ones that I could maintain were the ones that we got closer through it.' Pages follow a rigorous daily schedule, adhering to a 5 a.m. wake-up call every day before school begins at 6:15 a.m. The school program itself is 'a very unique program,' Nathan said, 'because the whole school revolves around the Senate schedule.' 'It's just like a regular school,' Preston added, but 'the classes are really short. They're only 35 minutes and a lot of it is just them talking to us and giving us the work that we're going to do the rest of the day because we don't have time in class to work through stuff.' That's because, Preston said, pages must report to the Senate before it convenes every morning, so it leaves the students with 'a lot of homework that will fill our time throughout the day.' Once the Senate adjourns, pages return to their dorms and can engage in some free time activities, such as watching TV, finishing homework or going on walks around the city. Curfew is at 9 p.m., after which pages must complete their chores and return to their rooms by 10 p.m. 'Most people just sat around and studied, honestly,' Nathan said of free time. 'And then you shower, do your laundry, get everything ready for the next day. And it's the same thing again.' Although pages have been in the Senate for almost two centuries, the program has followed close to the same schedule and requirements for just the last three decades. But Nathan and Preston's experience was unlike any other, they said. It came at an unprecedented time in Washington, when President Donald Trump was sworn in for his second term and turned the federal government on its head. Since then, Congress has been scrambling to keep up — often resulting in overnight legislative sessions and marathon speeches on the floor. And the Senate pages were part of it all. 'We had eight days where we missed school,' Preston recalled, explaining that 'if we go past 10 p.m. the night before, we can't go to school the next day.' 'Part of the busyness with that is (because of) the transfer of power with the new administration coming in, they're getting things done very quickly,' Nathan added. Those late nights included two vote-a-rama sessions, a process in which senators can introduce an unlimited number of amendments, allowing the minority party — in this case, Democrats — to hold up the process for hours. Pages also must be flexible in their schedules to return to the Senate on a moment's notice. That's what happened when the Neuhaus twins had to work around the clock for Booker's record-breaking speech — something the two didn't realize they would need to do until hours into the speech. 'Around 10 p.m., they got us all together, like, 'Hey, he's going to speak through the night, so we're going to need to send you all back at some point,'' Nathan recalled. 'We didn't know that he was actually planning for it, so we were unaware until it started, and then we realized this is going to keep going and going and going,' said Preston, who was working the late shift that night. 'So they sent us back (to our rooms) at like, 1 a.m. and we slept, and then got to come back at like 9 a.m. And then we finished it off until I finished at like 7 p.m. later that night.' 'But it was definitely crazy listening to him just go on and on,' he added. Despite the long hours, stringent guidelines and lack of social media access, the program is a 'once in a lifetime opportunity' they couldn't pass up, both Nathan and Preston said. 'What really made me want to do this program was just the opportunity that you get to see firsthand our American government, how it works, how how our republic holds itself today, and to see firsthand history be made,' Nathan said. 'I'm very patriotic. I have been since I was very young. And I would say, really, just the opportunity to see everything firsthand was the draw for me.' The ability to see how the federal government works from behind the scenes, Nathan added, has even inspired him to one day return to the halls of Congress. '(It was) an experience that we couldn't pass up,' Preston said. 'When are we ever going to be on the floor every single day and witness history being made? It was just something that we had to do.' The experience has also helped to blur partisan lines, the pair said, helping to ease concerns that cooperation between Republicans and Democrats is no longer possible. 'I feel like outside of the Capitol and the Congress and our lawmakers, there seems to be a great divide in our country,' Nathan said. 'But I think when we come here — of course, that's still there, but it's not to the extent that you feel it outside of this building.'
