At the beginning of the 2013 legislative session, Professor Richard Pomp of the University of Connecticut School of Law was the featured presenter at OpenSky’s inaugural Legislative Symposium.

At that time, the Legislature was faced with proposals to cut or eliminate the state’s income taxes and offset the revenue losses by eliminating some or all state sales tax exemptions. To help inform the discussion, Professor Pomp — whose casebook, “State and Local Taxation,” has been used in more than 100 schools, state tax administrations and major accounting firms for their internal training — discussed these 12 principles of sound tax policy:

  1. Don’t look for the Holy Grail for tax reform. There is no Holy Grail, only tough decisions about revenue and spending increases and cuts.
  2. Never use a shotgun if a rifle will do. Targeted adjustments to the tax code are more effective than sweeping changes.
  3. Be risk averse. Don’t put all of your eggs in one basket. Nebraska is best served by an assortment of revenue streams.
  4. The income tax is the only progressive element of a tax code. Cutting income taxes makes state tax codes more regressive, meaning low- and middle-income earners pick up a larger share of the state’s tax load.
  5. There is no free lunch as tax cuts don’t pay for themselves.
  6.  Do no harm. Tax changes often come with unintended consequences that outweigh benefits that might come from the tax changes.
  7. Be wary of tax rankings. Businesses are not worried about tax rankings.
  8. Taxes have little influence on where people live.
  9. If you want to attract recent grads, or attract dot-coms; create the conditions to encourage them to stay in Nebraska.
  10. Taxing business inputs will change the structure of a sales tax and is bad policy. Taxing services should be considered.
  11. Tax incentives result in waste in taxation and present a transparency issue.
  12. Taxes should be constantly monitored.

A more detailed description of these principles can be found here.

Professor Pomp will join us again on Friday as he and Professor Howard Chernick of Hunter College — another prominent tax researcher — will discuss sound tax policy during an OpenSky webinar. The webinar will run from 1:30 p.m. to 2:45 p.m. You can register to attend here.

Contact info@openskypolicy.org or 402-443-8676 for more information about the webinar.