As the federal government continues to accumulate debt, 28 states across the United States are considering tax cuts for the 2023-2024 fiscal year. Florida Governor Ron DeSantis announced in February his plan for the largest tax relief proposal in the state's history, which would save Florida families approximately $2 billion during that fiscal year. Other states like Idaho and Colorado are looking to cut property taxes, while Arkansas and Mississippi may eliminate individual income tax altogether. Nebraska and Virginia are both exploring reducing income tax rates.
Florida's tax cut plan targets sales taxes and proposes a permanent sales tax exemption on certain children's necessities like cribs, strollers, and clothing, as well as exemptions on some household items under $25. Meanwhile, states like California, Massachusetts, Illinois, New Jersey, and New York, which are the most debt-laden, are not considering tax cuts for the next fiscal year.
Republican-controlled states saw an influx of residents in 2022 as the exodus from high-tax states accelerated. Red states that led in population growth include Florida, Texas, North Carolina, South Carolina, Tennessee, Georgia, Arizona, and Idaho. "Shark Tank" star and O’Leary Ventures Chairman Kevin O’Leary said that if individual taxes are over 50%, people begin to leave states like New Jersey, New York, and Massachusetts.
The state tax cuts come as the Biden administration beefs up the Internal Revenue Service with thousands of new employees and a nearly $80 billion funding boost. The White House has remained firm that the expansion will not impact any household making less than $400,000 annually. However, House Majority Leader Rep. Steve Scalise, R-La., has warned that more than 90% of audits on U.S. families and small businesses fall below the $400,000 threshold. Scalise has also criticized the administration's efforts to tax, target, and surveil everyday Americans' private finances at every turn.
As Florida resident and investment adviser Gary Kaltbaum noted, "people, business, and capital will flock to where they're treated best." With the proposed tax cuts in various states, some families could save over $1,000, a significant amount for those who are bracing for continued economic headwinds.