State government organizations issue joint study proposing changes to state tax policy.

• Author: Eisenstadt, Amy

In February 1994, a joint policy study of the National Governors' Association (NGA), the National Conference of State Legislatures (NCSL), the Federation of Tax Administrators (FTA), the Multistate Tax Commission (MTC) and the National Association of State Budget Officers (NASBO) was released containing numerous recommendations for changing state tax policy. The report, Financing State Government In the 1990's, cited changes in economics, demographics and Federal government policy as causing the fiscal difficulties states have encountered in recent years and as justifying its call for wholesale changes in present state tax policies involving sales and use taxes, individual and corporate income taxes, passthrough entities and value added taxes (VATs). Among the more significant of the "options for change," the report recommended that:

* States significantly limit "tax concessions" for promoting economic development in favor of cooperative policymaking and consistent tax policies.

* States expand the sales and use tax base by eliminating exemptions and extending the base to services.

* The Federal government pass legislation requiring the collection of use tax on interstate "mail-order" sales.

* States reconsider "preferential treatment of income of the elderly."

* States tax passthrough entities (S corporations, partnerships and limited liability companies) at the entity level because passthrough tax treatment is too difficult for states to administer.

* States pressure the Federal government to solve the so-called "transfer...