Trump and State Leaders Push for Tax Cuts Amid Economic Concerns

Jefferson City: So, it looks like Trump is really pushing for some big tax cuts, right? He’s got a plan that could save individuals and businesses trillions. And guess what? Some governors and lawmakers in various states are jumping on that bandwagon, wanting to cut taxes too.

Now, many states have already slashed their income, sales, or property taxes in recent years. But here’s the kicker: state revenues are starting to slow down. So, while Congress is mulling over Trump’s tax-cutting ideas, state legislatures are trying to figure out if they can afford to cut taxes without hurting essential services like schools and roads. Unlike the feds, states can’t just run a deficit; they need to balance their budgets.

The Republican-led Congress is looking at extending some tax cuts from 2017, which are set to expire soon. Keeping those cuts could add a whopping $4 trillion to the deficit over the next decade. Trump also wants to lower the corporate tax rate to 15%, down from 21%.

While he was campaigning, Trump suggested exempting overtime pay and Social Security benefits from federal income taxes. If that happens, it could lead to even more state tax cuts. In 18 states and D.C., changes to federal income tax automatically affect state taxes unless they opt out.

After the pandemic, many states saw a surge in revenue thanks to federal aid, which led to a wave of tax cuts. But now, revenues are flattening out. A recent report showed that state tax revenues actually dropped by 0.6% in the first five months of the budget year. Some experts are saying states should hit the brakes on tax cuts, but others argue that revenues are still strong compared to pre-pandemic levels.

As we look ahead to 2025, more states are leaning towards tax cuts instead of increases. Kentucky is already on it, with a bill to lower the individual income tax rate. Missouri’s new governor is even talking about phasing out the state income tax altogether. Other states like Montana, Georgia, and South Carolina are also proposing tax cuts.

Interestingly, even Democratic leaders like New York’s Kathy Hochul are getting in on the action, proposing tax cuts and credits for residents. Meanwhile, Mississippi is looking to gradually eliminate its income tax while adjusting sales taxes.

Some states are also focusing on property tax relief due to rising housing costs. North Dakota’s new governor wants to cut property taxes using oil tax savings, while Wyoming’s lawmakers are pushing for a 25% cut in residential property taxes. Kansas is considering various proposals to limit property tax growth, and Nebraska’s governor is also looking to boost property tax relief.

So, it’s a mixed bag out there, with states trying to balance tax cuts and essential services. It’ll be interesting to see how this all plays out!