Public budgets and the revenue systems that support them are some of the most important policy instruments of our government. They reflect our values and priorities through decisions on how to tax residents and businesses and spend these collective resources. These decisions impact what families have to spend on basic needs and invest in their future, define the size of the government and its role in the national economy, and affect the lives of all Americans. EOF hosts an Annual Budget and Tax Briefing to explore why federal and state budget and tax work matters to national, state, and local philanthropy.
See a summary of the first plenary session from our 2024 Budget and Tax Briefing below.
State Budget and Tax Outlook
This session explored key trends, battles and opportunities, and what’s at stake and in play in 2024. Panelists shared insights on the recent historic state tax credit expansions, consequential state races and ballot initiatives, and efforts to support the equitable implementation of federal investments, including the Infrastructure Investment and Jobs Act, the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, and the Inflation Reduction Act.
Shana Bartley
Policy Officer
W.K. Kellogg
Kamolika Das
Local Policy Director
Institute on Taxation and Economic Policy
Chris Melody Fields Figueredo
Executive Director
Ballot Initiative Strategy Center
Justin Maxson
Executive Director
BuildUS
Video Recording + Slides: The video recording and slides for this session are available by request to grantmakers who work for a qualifying philanthropy. Contact Cema Siegel at [email protected] for more information.
Framing:
Despite years of historic progress made at the state level to invest in working families, most state tax systems remain “upside down,” meaning lower-income families pay a higher share of their income in state and local taxes than their wealthier neighbors. As federal aid from the COVID-19 pandemic winds down and state legislatures become increasingly gridlocked by political polarization, ballot initiatives are especially important for advancing meaningful change. At the same time, new, significant federal investments present a once in a generation opportunity to invest in low-income and Black and brown communities to address infrastructure needs and energy transformation. Funders can learn from wins, losses, and opportunities that arose in state policy in 2023 to inform their strategy for 2024 and beyond.
Recap:
State and local tax policy discussions are often centered on the regressive nature of most state tax codes, with 35 states taxing lower-income residents at a higher percentage of their income than everyone else. Amid dwindling federal aid, a broader movement toward equitable taxation is gaining momentum as various states explore progressive tax reforms to mitigate disparities, such as proposals in Massachusetts and Hawaii to tax high-value real estate. However, economic pressure looms large as 7 in 10 Americans live paycheck to paycheck and the opposition is exploiting financial anxiety to push regressive tax agendas under the pretense of reform. The crafting of policy narratives plays a significant role, as language is carefully chosen to mask the impact of regressive policies, contributing to public disillusionment and the spread of misinformation that has both short- and long-term implications. This situation underscores the urgent need for transparent, equitable fiscal policies that genuinely address disparities, challenging the manipulative rhetoric that obstructs progress toward tax justice.
Ballot initiatives have become a pivotal tool for advancing policies on economic justice, democracy, and reproductive rights. The increasing success of ballot measures underscores the need to safeguard and protect the integrity of direct democracy as some state legislatures have attempted to slow down or refused to implement voter-approved measures such as minimum wage increases, Medicaid expansion, and reproduction freedom. Despite voter suppression efforts and rising political polarization, supporting data reveals that ballot measures are transcending party lines, unifying voters around shared values.
How can funders help to safeguard ballot initiatives and support the advancement of equitable tax policies at the state level? Trust-based funding is key, according to the panelists. Funding innovation and being comfortable with failure fosters an environment that encourages experimentation and learning from setbacks. As progress continues at the state level, effectively leveraging federal legislation— such as the Inflation Reduction Act (IRA) — will be especially important. Federal policy helps to ensure that local efforts not only resonate on a broad, national scale but also contribute to achieving a fair economy, robust democracy, and sustainable future. Addressing the capacity gaps within community organizations and local governments will be essential for utilizing federal resources effectively.
The opponents to tax and the opponents to direct democracy have something in common: they don’t want to see strong, effective government.
— Shana Bartley, Policy Officer, W.K. Kellogg Foundation
No state and local tax systems are really truly fair or equitable across the income spectrum. We tax low- and/or middle-income earners far more than people at the top.
— Kamolika Das, Associate Director, Local Taxes, Institute on Taxation and Economic Policy (ITEP)
Ballot measures truly do give us hope in turning out people in this year’s elections. The people are on our side. They want to be able to drive these issues. They trust themselves more than any politician to make the right decision for their communities, and that transcends party lines.
— Chris Melody Fields Figueredo, Executive Director, Ballot Initiative Strategy Center (BISC)
Support all of the organizing and advocacy around those projects that turn an investment into a growing belief in democracy and what government can do when it works.
— Justin Maxson, Executive Director, BuildUS
Related Resources:
- NEWS RELEASE: Tax Systems in 44 States Exacerbate Inequality, In-Depth ‘Who Pays?’ Study Finds, Institute on Taxation and Economic Policy, January 9, 2024.
- BuildUS is an effort by a broad group of philanthropies to help build a stronger, cleaner, fairer economy. With an initial commitment of more than $50 million over the next three years, BuildUS will help workers and communities maximize the potential of recent federal legislation so that together we can build a better economy for us all.
- The Ballot Initiative Strategy Center’s Ballot Measure Hub provides expert analysis of progressive ballot measures they are tracking including a Trends Watcher.
Many thanks to our 2024 Watch Party Hosts!
