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*Federal Assistance ends after FY10-11 <br /> •But...revenues are not expected to recover until FY13-14 at the earliest <br /> Why Tax Modernization Matters <br /> •Protect past investments <br /> •Meeting current and future demands for public services <br /> •Impact on local governments <br /> Tax Modernization Principles <br /> •Adequacy— any reform should ensure that the State is able to bring in enough money to pay <br /> for the investments and services to continually improve the quality of life for all and to be able <br /> to manage the rapid growth. <br /> •Sustainability/Stability <br /> •Fairness <br /> •Comprehensive <br /> How do we get there? <br /> Broaden Bases and Lower Rates <br /> •Broaden the base of the sales tax to capture a greater share of economic activity <br /> •Broaden the base of the personal income tax and make it more progressive <br /> •Close corporate tax loopholes and eliminate ineffective business incentives <br /> Ideas to Improve the Sales Tax <br /> • Expand to cover more personal services <br /> • Eliminate ineffective caps and exemptions <br /> • Lower the state and local rates <br /> Ideas to Improve the Personal Income Tax <br /> •Maintain primary reliance on progressive income tax <br /> • Broaden the base of income to which the rates are applied <br /> •Adopt a more progressive rate structure including adding more brackets to the top <br /> • Lower all rates, but substantially lower the bottom rates <br /> •Increase/Add refundable credits for low-income taxpayers <br /> Ideas to Improve Business Taxes <br /> •Close corporate tax loopholes by enacting Mandatory Combined Reporting <br /> •End ineffective business incentives (Article 3J development tax credits, a.k.a. the Bill Lee Act <br /> credits) <br />