Tuesday, December 1, 2020
Erin Scharff (Arizona State) presents Revisiting Local Income Taxes (with Darien Shanske (UC-Davis)) virtually at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:
It has been decades since legal scholarship has seriously explored the role of income tax laws in municipal finance, but recent federal and state court cases are changing the laws related to municipal income taxation. At the same time, local governments are increasingly searching for new sources of revenue, especially as they face increasing pension obligations and increasing maintenance costs on aging infrastructure. Independently, and in part as a response to rising income inequality, there has been a resurgence in interest in progressive taxation. So far, however, this political moment has not resulted in significant reforms to local tax policy, in large part because of the limited authority local governments often have under state law. As local activists and policymakers begin to think about how to rebuild city budgets post-Covid, they will once again be looking for new local revenue options.
This paper makes the case that local income taxes should be a part of the local government revenue toolkit and offers suggestions for the design of a local income tax taking into account increased taxpayer mobility.