Appendix F: Tax Reform
Efforts in Other States
At the request of the Committee, tax reform efforts in several other states were
researched and analyzed to determine common factors that prompted the tax reform
efforts and whether the reform efforts were successful. The following states are
included in this analysis:
What Prompted the Tax Reform Efforts in Other States?
In most of the above states, efforts for tax reform were in response to one of two
• Taxpayer perceptions of high tax burdens; or
• Immediate or future budget shortfalls.
In the last decade, several states have responded to the public perception of high tax
burdens by undertaking studies to evaluate the relative tax burdens of taxpayers in the
state, and developing alternative proposals to reduce the burdens. For example, tax
reform efforts in New Hampshire, Michigan, and Minnesota were prompted in part by
taxpayers’ perceptions that the property tax burdens were too high and that the taxes
themselves were too complex.
Also in the last decade, many states have experienced a budget shortfall or were
anticipating that revenues would fall short of budget needs in future years.
Tennessee’s tax reform study and legislation was driven by the $900 million shortfall
in the Governor’s proposed budget in 1998. While Connecticut completed its study
of the state tax structure in 1990 in a period of relative economic prosperity, the
subsequent enactment of a personal income tax (one of the analyzed alternatives)
occurred in a period of severe budget crisis.
Were the Reform Efforts Successful?
The majority of states listed above have undertaken their tax reform efforts in
response to a major crisis: after taxpayer perceptions have reached an all-time low, or
when the state is in the throes of a budget deficit.
Although one could ascribe many reasons for the failure of various tax reform efforts
in the remaining states, the common sens