Tipsheet

While Democrats Take Credit, It's in Red States Where Shoppers Have Money to Spend for Christmas Holiday

Rebecca Downs
Rebecca Downs  |  December 23, 2021 9:30 AM

Democrats continue to try to take credit for the economy, as if they have no concept of polling consistently showing that President Joe Biden is underwater on this key issue. And, when it comes to the talking point that shoppers are better off, with more money in their pocket to spend on last-minute gift ideas, it's actually in red states where this is the case. Fifteen Republican-led states have cut taxes this year while Democrats in Congress are meanwhile clamoring to raise taxes.

In June, Gov. Doug Ducey in Arizona signed a $12.8 billion budget, which included a tax break. "Each and every Arizona taxpayer, no matter their income, will experience a tax cut under our historic tax reform,” Ducey said." The budget implemented a flat tax of 2.5 percent for everyone, eliminating the state's taxation system that ranged from 2.59 percent for first $54,000 of income to 4.5 percent for income above $327,000.

In Arkansas Gov. Asa Hutchinson signed the largest tax cut in state history. The tax cut lowers the top tax rate from 5.9 percent to 4.9 percent and also cuts the corporate tax rate to 5.3 percent. It will provide an additional tax credit for those who make less than $23,600.

In May, Florida's Gov. Ron DeSantis signed legislation that provides more than $168 million in savings for taxpaying families and business. It also includes a tax relief on hurricane supplies and creates the state's first permanent sales tax exemption for independent living items for seniors, such as shower seats.

Further, the legislation also included the Internship Tax Credit which provides tax relief for Florida businesses if they employ and retain student interns.

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Another largest tax cut in history came for another state this year, in this case for Idaho, signed by Gov. Brad Little in May. Idaho residents were provided with $220 million in immediate one-time income tax rebates and $163 million in ongoing tax relief. The top tax rate was also lowered to 6.5 percent. 

Such a tax relief was part of Gov. Little's "Building Idaho's Future" plan. 

"Curbing government spending and returning taxpayer dollars should be the perpetual mission of public servants," Little declared in his 2021 State of the State and Budget Address.

In Iowa, Gov. Kim Reynolds signed legislation in June that the Des Moines Register referred to as "sweeping." It dropped the top individual income tax rate from 8.53 percent to 6.5 percent and lowers the Iowa income tax brackets from nine to four. 

The law will also phase out Iowa's inheritance tax by Jan. 1, 2025. 

There is a particular focus on mental health in that the mental health system will no longer be paid for by property tax but rather by the state's general fund. 

While Louisiana is governed by a Democrat, John Bel Edwards, voters in a November referendum approved of Constitutional Amendment #2, which will lower tax rates in exchange for lifting a tax deduction for paid federal income taxes.

Other provisions include making it easier for lawmakers to completely eliminate the income tax, cut personal and business taxes. Louisiana Illuminator noted that "Supporters believe lowering tax rates will attract more business to Louisiana."

In Missouri, Gov. Mike Parson in June signed legislation that reduced the income tax rate to 4.8 percent. 

Montana's Gov. Greg Gianforte in May signed legislation that reduces the amount of income tax brackets and another piece of legislation that cuts taxes for the top marginal rates from 6.9 percent to 6.75 percent in 2022 and then to 6.5 percent in 2024. Gianforte said that taxpayers could see a $120 million reduction in what they pay to the state. 

Cutting income taxes was a top goal for the governor's "Comeback Plan," which Gianforte said was "needed to make Montana more competitive." He also said it had "been long overdue."

In May, the legislature in Nebraska passed legislation that will lower the corporate income tax rate from 7.81 percent to 7.25 percent. Gov. Pete Ricketts had called on there to be more tax relief in signing the state budget. 

New Hampshire benefited with new Republican majorities and Gov. Chris Sununu. In June, Sununu signed a two-year budget that cut the state's rooms and meals tax from 9 to 8.5 percent, which is at the lowest level in more than a decade. The reduction went into effect in October. 

North Carolina, which is governed by Democratic Gov. Roy Cooper but has Republican-controlled legislatures, passed the largest tax cut in state history last month. The budget that Gov. Cooper signed reduces the state's individual income tax rate from 5.25 to 4.99 percent next year, which will be lowered to 3.99 percent in 2027. And, the corporate income tax rate will be zeroed out starting in 2029.

North Dakota's Gov. Doug Burgum signed legislation last month as the special session adjourned that provides $211 million in income tax relief over the next two years while eliminating the state income tax bill for about 300,000 taxpayers in the state and providing partial relief to another 200,000 taxpayers.

"This bill is a victory for half a million hardworking North Dakotans, providing them with real, meaningful tax relief for this year and the next," Burgum said. 

In Ohio, Gov. Mike DeWine in June signed legislation that reduces personal income tax rates by 3 percent. It also eliminated the sales and use tax on employment services and placement services, as of October 1, 2021. Ohio had been one of the few states to tax such services. 

Oklahoma's Gov. Kevin Stitt in May signed legislation that reduced the corporate income tax from 6 percent to 4 percent and also reduced individual income tax rates by 0.25 percentage points.

"I am proud to sign legislation that lowers taxes and lets hardworking Oklahomans keep more of their money,” Stitt said in a news release," who also pledged to put the state in the Top 10 for businesses. 

Reporting from The Oklahoman highlighted how "Three years ago lawmakers raised taxes. Now, tax cuts are coming."

In Wisconsin, Democratic Gov. Tony Evers signed legislation in July that cuts taxes by $2 billion over two years by lowering a tax bracket from 6.27 percent to 5.3 percent. 

While Gov. Evers tried to take credit for the tax cuts, with Republican co-chairs of the budget committee calling it "laughable." As Senate Majority Leader Devin LeMahieu said in a statement, according to AP, Evers "got boxed into a corner and rather than fight for his unpopular budget and risk a political knockout, he and his team threw in the towel and signed our responsible budget."

The Republican State Leadership Committee (RSLC) provided a comment on such GOP successes. 

"Democrats spent all of 2021 hurting the wallets of hardworking taxpayers with their reckless tax-and-spending agenda that raised prices on everything – from gas to groceries to holiday gifts," said RSLC President Dee Duncan. "At a time where inflation is at the highest level in over 40 years, state Republicans succeeded in putting more money into the pockets of hard working families by cutting taxes and serving as the counterweight to the D.C. Democrats’ big government takeover."