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States Changing Their Tax Systems in the Right Direction

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    Tax Foundation president Scott Hodge on the states with the best tax plans.

  • Duration 3:03
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President Obama's state of the union is tonight for what we're told he'll talk -- a little bit.

About tax reform our next guest though says if they want some guidance he should simply look.

At the states Scott -- is president of the Tax Foundation joins us now which states should be looking at Scott as an example or guide.

Why I think the first place to look is Louisiana.

We're governor Bobby Jindal is energy about to introduce a very bold plan.

To eliminate both his corporate and personal income tax and replace it with a broader sales tax I think that's really estate to watch -- -- but we're also looking at sun Nebraska where the governor there as looking at a similar plan to cut or eliminate.

His income taxes and replace it with a sales tax that seems to be the trend in many states we're going to see here we've done this story.

The couple times on at least broadly.

We were gonna see a test of conservative vs liberal economic policies the next few years because of the very much of examples that you're giving the governors and because of other examples where -- democratic governors that trying.

-- strategies but the key difference in the states is they have to balance their budgets you know they can't run deficits most of these states so they'll do it.

By raising taxes in some way they'll just either call -- closing loopholes although say sales taxes vs income taxes but.

So we'll see which essentially we're gonna see which tax hikes for -- -- some.

Weird -- Well -- many of these are being done these reforms are being done in a revenue neutral way Sawyer cut -- rates on one hand.

You're increasing other taxes on the other hand so that the government comes out even but the economy is better off.

Now on the other hand we're looking at that sort of the negative side of this.

A Minnesota where the governor is proposing over three billion dollar tax hike across the board.

In which the income tax the individual income tax would go up.

Almost a 10%.

Right we're also seeing Governor Deval Patrick in in Massachusetts.

Proposing to increase income taxes there.

Those are not net revenue neutral those are straight up.

Tax increases in order to balance their budget and overall -- these examples apples to apples in terms of comparisons for we can -- at the federal level or because of some of the state requirements is -- not worth.

Comparing the -- Well I think we can -- really is certainly well what we're look at the federal level we wanna do make you wanna do tax reform in a revenue neutral ways -- I wanna do it in a way.

That provides the government the same amount of -- for our money.

But it does -- -- in -- reform basis it simplifies the tax code but is also better for the economy.

That in turn will boost economic growth and lead to more tax revenues in the future parents got -- do you think the Republican Party by the -- and a good job of arguing.

Some of these points that you just -- politically and if so.

If not out of improve it.

Now they've done -- very poor job but let's look to -- would some Dave Camp will do in the house Ways and Means Committee he's the chairman and is committed to writing a comprehensive tax reform plan here in the summer.

I hope that he can get it right and proposed proposed -- really bold plan -- overhaul the tax system a marker revealed talk at all about tonight he's got the response on the Republican side Scott -- thanks a lot.

You -- thank you.

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