In this episode of Tax Notes Talk, two state tax policy experts discuss key tax proposals that states will likely address in 2025, including efforts to raise revenue and extend provisions of the Tax Cuts and Jobs Act.
Tax Notes Talk is a podcast produced by Tax Notes. This transcript has been edited for clarity.
David D. Stewart: Welcome to the podcast. I’m David Stewart, editor in chief of Tax Notes Today International. This week: state status update.
As 2025 kicks off and I’m stuck at home due to the snow in the Washington, D.C., area, the tax world is gearing up for what could be another big year. So this week we’re taking a look at what’s expected for state tax policy here in the U.S. for the year ahead.
Now there are a number of issues to keep an eye on and here to help us sort through it all is Tax Notes senior reporter Paul Jones. Paul, welcome back to the podcast.
Paul Jones: Hi, David. It’s good to be back, although back in the sense that I’m calling in from sunny Sacramento, California, and not under several feet of snow in D.C.
David D. Stewart: Yeah. It looks great, but the shoveling is not fun. Now I understand you recently had a couple of conversations on the issues to keep an eye on this year. Who did you talk to?
Paul Jones: That’s right. I spoke with Stephanie Do, and also Amber Wallin with the State Revenue Alliance.
David D. Stewart: And what sort of things did you talk about?
Paul Jones: We discussed a range of topics, including how states will be watching to see how the debate in Congress over potentially extending and/or modifying expiring Tax Cuts and Jobs Act provisions might affect them, and also ways that lawmakers in some states may be looking to generate new revenue, such as through higher taxes on the wealthy. We also variously touched on controversies over apportionment, efforts by state lawmakers to tax the digital economy or increase their taxation of it, and also possible proposals by some states to look into requiring worldwide combined reporting, among a variety of others.
David D. Stewart: All right. Let’s go to that interview.
Paul Jones: Hi, Amber, thanks for joining us.
Amber Wallin: Hi, Paul. Great to be here. Happy New Year.
Paul Jones: So, Amber, states are obviously waiting to see what Congress is going to do with respect to, for example, the expiring provisions of the Tax Cuts and Jobs Act. And I’m curious if you think states are in a position right now, or will be this year maybe, to do anything with respect to figuring out how they may want to change their conformity to the federal tax code or make preparations in anticipation of some of the changes that might be made by Congress, particularly now that we obviously have Republican control of Congress and the presidency. Do you think that conformity changes are going to be a key issue for states in 2025?
Amber Wallin: That’s a great question, Paul. I think that there’s so much on the horizon when it comes to tax and certainly what happens at the federal level in the tax debates coming up, already ongoing, with the expiring provisions of the Tax Cuts and Jobs Act. There’s a lot for states to be considering and I think certainly conformity is one of those things. All states with individual and corporate income tax provisions link to some degree or conform to federal tax rules. And they do that for different reasons. A lot of times, simplicity with regulation and compliance. So that’s important and states can and should be thinking about those issues.
But I think at this point, conformity responses and needs are still a bit uncertain and will depend on the timing and the provisions that are passed or extended or expire. And so I think there’s a lot for states to be considering, certainly when it comes to conformity, but possibly even more so. I think states are now in the position of considering fiscal impacts that they might face, depending on federal tax and other budget negotiations that are happening in Congress and how those will likely impact state revenues.
Paul Jones: Right. And on that point, obviously the CBO had projected that if certain provisions, some of the expiring provisions of the Tax Cuts and Jobs Act, are extended, it would create something on the order of a $4.6 trillion reduction in federal revenue over the next 10 years. And obviously that could portend cuts to federal spending on various programs. And of course the GOP’s control of Congress and the presidency also would suggest that they may be more open to certain cuts.
So looking at some of these federal policies, you had mentioned to me previously, for example, that a lot of the COVID-era aid has been expiring, which puts states in a position of either cutting spending on services or looking for other money to fund continuing spending that was previously covered by that federal aid. What are some of the pressures that states might be facing or some of the ways that reductions in federal revenue might force them to look at additional revenue?
Amber Wallin: Yep. Exactly. I think that’s exactly right. What we know, even while debates are still occurring on the Hill, in Congress, and will continue to, what we know is that no matter what, states will be facing declining revenues in upcoming years.
We know as you said, federal COVID relief is winding down. This is having big impacts on state budgets, particularly when it comes to education spending, for example. And so you see that a lot of states have expanded key education, health, well-being, safety net programs, in recent years that were crucial to communities recovering from COVID, health and economic harms. And so we know that states have really been depending on that federal COVID relief.
So I think the way to think of it is these different, maybe three, big buckets of declining revenues for states. COVID federal relief is winding down. We know that states also during COVID era, when they had more money coming in, particularly from federal sources, that many states, 20-plus states in recent years, gave significant broad tax cuts that benefited folks in some ways but also significantly reduced state revenues. That wasn’t so much harmful in years when states had a lot of federal money coming in. But we know with that federal aid winding down, with those state tax cuts now going into effect, that that’s an additional fiscal responsibility that states will have to make up.
And then we talked about it, but if the federal tax plan is extended, it will be extremely expensive. You noted that $4.6 trillion price tag. That’s huge. It’s almost too big of a number to comprehend. But what it means is that in order to pay for those tax cuts, we would likely see cuts in critical federal programs. Things like safety net cuts, things like health and education, Medicaid program budgets, supplemental nutrition assistance program, housing programs. All of these programs are potentially likely to be cut, not just to pay for the federal tax plan, but also as part of these ongoing discussions that have been had with a Republican trifecta in Washington, D.C., that is considering trimming down programs, Department of Governmental Efficiency, things like that.
So we know that states, between federal COVID relief winding down, surplus-era tax cuts, and federal cuts to key programs, we know that states will be shouldering more of a responsibility for providing the revenues for key programs that their communities depend on, that their communities not only depend on in times of hardship, but the communities depend on in order for a chance for everybody to have an opportunity to really thrive.
And the only other thing that I’d add to that are these implications, not just on the budget side, that states are considering, but also on the fairness side. Progressivity, tax equity, tax justice. All different terms that refer to what folks are paying in state and local taxes and in federal taxes. And what we know is that the federal Tax Cuts and Jobs Act, while most folks saw cuts, that benefits overwhelmingly went to really wealthy earners. And so an extension of those tax cuts also means that state residents will face widening income inequity in-state. And that is another thing that we see a lot of state lawmakers considering as well.
Paul Jones: So we’ve got the federal side and potential cuts to federal programs and extensions to the Tax Cuts and Jobs Act, but you’ve also got just the changing revenue picture sort of innately for certain states. I cover California and Washington. Obviously both of them are dealing with revenue shortfalls now. And as you also noted, there were a number of states in the last couple of years during the period of surpluses that chose to cut their taxes significantly and reduce their tax bases and also making somewhat regressive changes to their tax codes. Not to belabor the point, but do you think some of those states are now potentially going to feel pressure to revise their approach to taxation, particularly the ones that made lots of cuts?
Amber Wallin: The short answer, I would say, is yes. A number of states are facing some big choices and I think ones that are both practical and also existential. So on the practical side, as we’ve talked about, states are going to be facing challenging budget situations due to declining revenues on a few different fronts. And so states, as they go into the 2025 legislative sessions, the 2026 legislative sessions, they’re going to be faced with that idea about funding critical services or potentially cutting budgets. We know that a number of states expanded many key programs for all of their communities in recent years, but with declining revenues, it’s a very practical choice for folks about whether or not states may consider to extend that funding that they know has been really impactful in things like reducing hunger, in enabling more folks to be able to attend higher education, reducing child care costs, supporting housing, affordable housing initiatives, providing basic safety nets like unemployment insurance support, providing support for new start-up businesses. These are all critical services. And so with declining revenues, state legislatures and state governors will be facing that choice about funding those things or cutting budgets in ways that they know would be harmful.
And then I think the other aspect of this is that a little more existential or values aspect of it. What we’ve seen in recent years is that there has been a growing recognition about the role that state tax systems play in either improving or worsening economic opportunity or outcomes for the majority of their populations. And what we know now is that right now, 44 states’ tax systems exacerbate income inequality. And so what that means, is that the higher-income groups in-state often pay a lower rate in state and local taxes than do very low-income groups. There’s only six states and Washington, D.C., that reserve the lowest tax rates for their lowest-income residents when you consider all of the state and local taxes that go into it.
And so I think those two different elements coming together in state legislatures around the country, a very practical need to face declining revenues and decide how states will deal with that. And then also a growing recognition of inequity or unfairness in many state tax codes will start to come to a head in 2025.
Paul Jones: We’ve talked about declining revenues, possible cuts to federal spending, and in our previous conversation I think you referred to these as negative factors that are maybe going to pressure state policymakers to look for additional revenue. But as you’ve also previously alluded to in this conversation, you mentioned that there are values and policy arguments for addressing regressivity, and obviously with the GOP in control of Congress, we’re probably not going to see a lot of movement towards progressive tax reform. We’ll have to see, but that’s not generally been the trend. So it may fall to states to continue pushing for more progressive reforms in terms of how taxes are levied in this country.
And I’m curious if you can talk about maybe some of the positive trends that could push for more progressive tax policies. I know that Washington state, obviously its Democratic majority, is feeling enthusiastic because voters upheld the capital gains tax it recently enacted. Do you see some other states where there’s potentially going to be a sense of more impetus to pursue progressive tax reform?
Amber Wallin: Yeah, that’s a great question and I think it’s true. And there are these negative factors that are putting that strong pressure really on state policymakers and state budgets. And there’s also other factors that I think point to a growing movement or growing momentum towards more progressivity in state tax systems. And I think about them in four main buckets.
One is, there’s policy momentum on this front. So while we have seen a number of states cut taxes in recent years when they were flush with federal COVID relief, we’ve also seen that more than 10 states have passed policies in recent years at significantly improved progressivity. New Mexico, where I’m located, is a state that saw more of this in recent years than in other states. But these are policies that both right-side the tax system when we talked about progressivity and regressivity and its state tax code, but they’re also raising revenues. And what we’ve seen just in 2024 alone was that there was over $40 billion in new state and local revenue that was approved in 2024. And a number of other states have seen bills, even if not passed, that they either passed out of a new committee or they went from the House to the Senate. So bills that are progressing further then in recent years.
Another bucket of that momentum, I think where you can see some momentum growing for progressive tax policies, is when it comes to policymakers. And what we saw between 2023 and 2024 was that sponsors for progressive tax bills, tax justice bills, more than doubled across the country. Legislative sponsors went from 250 to over 500 legislative sponsors and there are a number of state legislators across the states that were up for election in November 2024 at the state level that considered themselves tax progressivity champions that won their races. And so I think again, there’s policymaker momentum.
There’s also media momentum. There’s been a major shift in recent years about state tax issues, both growing coverage of those issues like we’re talking about it today, and then also a little bit more what we would say would be positive media coverage that focused a little bit more on revenues and the role that they play in providing critical services. And who is paying those, who’s getting the breaks, who’s getting the benefits?
And then one, I list it last, but I think it is one of the most important factors that we’re seeing, is that there’s a growing movement of diverse groups that are pushing for more just tax policy. I’ve worked on a lot of different policy issues over many years and I would say taxes more than any other are the one issue that are very mostly behind closed doors historically. Historically, it’s a very small group of folks who have access to this information, not only because it’s wonky. And I think while you and I love tax policy, a lot of folks don’t, a lot of folks, their eyes might glaze over when talking about it, but it has an enormous ability to impact folks’ lives.
And what we’ve seen in recent years is that there are more and more groups, more and more advocates, more and more community groups, more and more regular community members who have not previously necessarily had a role or a voice in the tax system that are coming into this tax movement. And so I think that that is an additional, I would classify it as positive, but more pressure for a tax system to be equitable and to really benefit regular community folks, parents, workers, and small business owners.
Paul Jones: We’ve heard a lot about the digital ad tax litigation regarding, I believe it’s Maryland, but with California, there was an effort last year to create a digital ad tax with the idea — and this was by Senator Steve Glazer, who’s no longer in the California Legislature — but he proposed one of the digital ad tax bills in California that particularly framed the use of online platforms by users and the willingness of users to allow the online platform provider to harvest their data and target ads towards them using it as an untaxed exchange and to frame it as something that should be taxed that way and then to levy a tax on the revenue from digital advertising, basically as a proxy for taxing that exchange. I thought that was an interesting concept, and I’m wondering if maybe we’ll see other states pursue digital advertising taxes using a similar line of logic.
Amber Wallin: Yeah. It’s a fascinating thing because it gets to that idea of values are just so wrapped up in digital ad taxes. And I think honestly that we’ll see more creativity as we see on the federal level narrowing options, we expect that there will likely be a big push to pass more tax cuts for really wealthy earners, really big corporations, I think that there will be increasing creativity and ingenuity about how at the state level, states are still able to maintain critical revenues.
And it’s interesting as I think there’s — more and more, I think there’s a connection being made between taxes, tax policy, and democracy. And certainly we’ve seen the big corporations that will benefit most from the Tax Cuts and Jobs Act’s extension, that those groups are really invested in getting what they want. But I think more and more regular folks are recognizing that tax policy is more than just closing loopholes and raising revenues and improving fairness. Anything about progressive tax policy, it really is a cornerstone of how regular folks can build wealth, how public programs can be funded, and how faith in public programs and the role that they play in society, how those are important. And so I think it is that connection between tax policy and democracy was one that came up in the 2024 elections.
And I think it is one that will be increasingly made about the role that tax policy plays in ensuring that regular folks also have opportunities to build wealth and are able to really thrive and to achieve the opportunities for them and their families that they desire, and that it’s not just an issue area that is controlled by those that are most wealthy and well connected.
Paul Jones: Yeah. I think you’re right. There’s a values element to it that probably is more engaging towards regular people, obviously than the wonkier aspects of it. But I agree with you. I think we’re going to see a lot of proposals in 2025 that will really accentuate both. The policy questions and the options that policymakers have in terms of generating new revenue or, if they choose to reduce taxes, how you do that and what ways you can make that equitable or accomplish certain results. And then of course, like you said, the fairness issues. So it’ll be fascinating to watch and I’m sure we’ll be talking to you in future about it. But in the meantime, Amber, thank you very much, and like you said to me earlier in this podcast, Happy New Year.
Amber Wallin: Yeah, Happy New Year and thanks again to you and your team and all the good reporting that you all do, and I appreciate you having us on. Thanks so much.
Paul Jones: Hi, Stephanie. Thanks for being with us today, it’s always a pleasure to talk to you.
Stephanie Do: Oh, I’m so honored to be joining you again for a second year.
Paul Jones: Yeah. And so we’re heading into the 2025 legislative session and obviously there are a range of potential tax policies that are probably going to see some new or more likely in many instances renewed focus by states and state lawmakers. So I think we’ll tackle the elephant in the room first. And obviously there’s not a lot that’s known yet. We’re just hearing some ideas cropping up in Congress. But how do you think the discussion over whether to extend and again possibly amend key provisions of the TCJA, how is that going to have an effect, if any, on state policy-level discussions in 2025?
Stephanie Do: So to take a step back a little bit, the air in 2024 was consumed by the election at the state and national level. So now legislators can shift their focus and energy towards the 2025 legislative sessions. That alone, I think, will lead to a much, much busier year than 2024 for state-level tax proposals. But I do think that 2024 provided very good insights on what state tax proposals we may be seeing considered by state legislators in 2025. In 2024, in states at least that were more active with state tax proposals, the key indicator, and what I’ll definitely be watching out for in 2025, is how well a state is doing with its revenue outlook. We’ve seen states with healthier revenue outlooks trying to focus on cutting tax rates and providing property tax relief, especially with residential property, while states that were in the red in 2024, they have considered a multitude of ways to cover those shortfalls.
And although that has included trimming down budget expenses, states have been looking at tax revenue raisers. As state revenue booms from the COVID pandemic years have dried up, I think that there will be more states who will be considering tax revenue raisers this year. And as you mentioned, there are many provisions in the Tax Cuts and Jobs Act that will be expiring in 2025 and Congress will need to address this in 2025 by amending or extending those provisions, or else those provisions will lapse. So it’s to be seen how that impacts state-level policy decisions.
Paul Jones: So moving beyond the federal question, one thing that state lawmakers have been working on or looking at in a number of states is, for example, whether to shift towards adopting mandatory combined worldwide reporting or taking some other steps. A couple of years back I think there was a couple states looking at going back to or adopting some sort of tax shelter-list type of legislation. So there’s been an interest in going after foreign activity, foreign-source income. What are some of the things you think we’ll see in the 2025 legislative session with respect to those sorts of ambitions by state lawmakers in which states, maybe if you have an idea of any, will take action or seek to take action on those topics?
Stephanie Do: So some lawmakers perceive multijurisdictional businesses, especially multinational ones, as using tax planning to shift profits to lower-taxing jurisdictions and that these problems should be addressed by them at the state level. From the legislative perception, I’ve seen that through legislators consider adopting mandatory worldwide combined reporting or including more tax revenue attributed to cherry-picking foreign-source income. And from a state tax agency perspective, I’ve seen focus on alternative apportionment approaches and transfer pricing. All of this in the name of states wanting to solve profit shifting.
Now in terms of which states I anticipate considering any of these methodologies to try to address the perceived issues with profit shifting and trying to address it at the state level, it really runs a gamut, from a state that is a separate reporting state trying to use transfer pricing or alternative apportionment to bring additional companies into the reporting group, to states that may already include some sources of foreign- source income but not necessarily being satisfied with that and wanting instead to shift to mandatory worldwide combined reporting in thinking that there may be additional revenue that they’re not capturing already as is.
Paul Jones: Let’s move to a different topic. What about state rules and laws for apportionment? Are we going to see potentially states looking at updating or modifying their rules for apportionment, particularly with respect to corporate income? And I’m sure we’ll talk briefly about the situation in California with the Office of Tax Appeals’ Microsoft decision and the response by Governor Newsom and the California Legislature to that.
Stephanie Do: Apportionment has such an interesting history. When states primarily had a three-factor apportionment methodology, which sales factor was based on where are the costs of goods sold, there was so much litigation on determining where are the cost of goods sold for a company. Now, states have trended towards a single-sales-factor apportionment method, with the sales factor based on market-based sourcing. And now there’s a never-ending stream of state litigation on determining where is the market. Changes to an apportionment factor can cause significant swings in a taxpayer’s state tax-based apportions to a state. I don’t think litigation surrounding apportionment issues will ever stop. And as you mentioned, in California there was a significant case that was decided by the California Office of Tax Appeals addressing an apportionment issue. Paul, do you want to cover that a little bit?
Paul Jones: Yeah. In that case, Microsoft, it had realized a significant amount of money from foreign dividends, it had generated revenue from those. And then in California it took a deduction that the state allows for those dividends and then paid its taxes and then it sought a refund and it said it should be allowed to include the amount of dividends that it had deducted into its sales factor denominator, which would reduce the amount of taxes that it owed by reducing its apportionment to California. And the state’s Franchise Tax Board said no, and they referenced a previous decision that they’d made saying that sort of thing wasn’t allowed. But the Office of Tax Appeals, California’s tax appeals forum, sided with Microsoft and said ultimately that they should get a refund, which triggered a response.
Stephanie Do: And it was a significant and surprising response with the California legislators and Governor Newsom specifically addressing that Microsoft decision by the California Office of Tax Appeals legislatively and essentially negating the Office of Tax Appeals decision. And that legislation that was enacted this year is now currently in litigation in two separate cases. And that is a really unusual anomaly. The Microsoft decision in California created a perfect storm. It had a very large negative fiscal impact and California was not in a position to absorb a huge hit to its budget that was already at a huge deficit. And last year the deficit was in the range of $55 billion. If this decision would have had a smaller fiscal impact to California and had California been in a revenue boom as in prior years, I don’t know if this decision would have even made it onto the legislators’ or the governor’s radar.
And California is one of the few states that taxes a portion of foreign dividends. So for states that don’t tax foreign dividends, this case and the issues at issue aren’t even up for consideration, though I do think that the potential broader legislative impact may instead be on whether or not states will be emboldened to enact legislation retroactively. This is one of the primary reasons why the legislators and the governor’s response to the Microsoft decision is now in litigation because one of the primary questions at issue now is whether or not it is permissible for the legislators and for the governor to enact this legislation as impermissible retroactive legislation.
Paul Jones: And we should note for context here that the position taken by the state Legislature and the governor in that case is that the legislation that they approved is simply clarifying in statute what the existing law was. And in both the California cases, that is one of the things that’s being disputed. They’re arguing that it is retroactive and that, I believe in both cases, they’re claiming that it represents a due process violation. So we will have to follow that litigation and see what the outcome is, because I think you’re right that that will potentially inform other states as to whether or not they can make clarifications, as I’m sure they would be framed, that could have significance from maybe a taxpayer’s perspective, retroactive effects or change their understanding of what the previous law was.
So moving on, we were talking about California’s difficult budget situation this year, and you had mentioned this earlier when we talked about federal conformity and the TCJA. But can you elaborate a bit on how the budgetary situations, and also to some extent the political situations of states, now that we are done with the election, might impact their tax policies? What are your thoughts on what we might see from states in terms of blue and red experiencing good revenues or dealing with potential deficits or just a slowdown in revenue generation and what sorts of tax policies that might cause states to pursue?
Stephanie Do: States have become more politically polarizing, with state governors and majorities in both state legislative chambers all being a part of the same political party. This is known as a trifecta. So, generally, red states are becoming redder and bluer states are becoming bluer. That alone is causing tax legislation coming from very different ends of the spectrum. Now when you also factor in budgetary situations, you get some really drastic state tax policies and legislative proposals.
And I think it’ll look even more drastic in 2025 as the last of the federal funding from the pandemic runs out. States like Washington and California are going into 2025 expecting significant budget shortfalls and both states have Democratic trifectas. Those states have already considered very unusual novel tax revenue- raising proposals in the past, such as wealth taxes or digital ad taxes aimed at large technology companies. And I think there will be more states joining the ranks of Washington and California, especially as they’re constrained with budgets in their tax revenue. And the same holds true for the other end. Red trifecta states that don’t have budget shortfalls, states like Utah and Idaho, have already been trying to offer broad tax cuts in the past years, such as income tax rate reductions. And I think that trend will continue into 2025.
Paul Jones: Yeah. I think you’re right and we should note that as of the time of this recording, Washington’s elected leadership have indicated they may make another pass at either a wealth tax proper or some form of taxation on higher-earning or wealthier residents.
Let’s focus on another trend at the state level and that is property taxes. I know that in Texas there have been efforts over a couple of years to try and get control of the increased cost of property taxes to residents. Wyoming, I think in the November election, approved a constitutional amendment to try and provide some relief. Do you think this is going to continue to be a trend? Do you think it might expand? Can you talk about how states are trying to address property taxes both for homeowners on one hand, but also for businesses as well?
Stephanie Do: I previously talked about some of the political party influence in upcoming state tax trends, but property tax relief is an issue and a trend that appears to transcend party lines. This is definitely a continuing trend into 2025. Constituents have been grumbling about property tax liabilities going significantly up, which I think is a long-term consequence of the housing market boom during the COVID pandemic and historically low interest rates. Now, the solution that offers property tax relief, though, has ranged dramatically, from capping valuation, to tax swaps for property tax relief, to creating split roles. And it’s clear that property tax relief does not have a one-size-fits-all. So I do think that 2025 will have more proposals to provide property tax relief, but there is going to be a lot of challenges in determining what is the right method to offer that.
Paul Jones: Yeah. And with the interest rates obviously having been increased, do you think that the actions by the federal government may also help with this in the long term by curbing the continued growth and valuations that have caused people to be sitting on one hand on a house that will sell for a higher price, but at the same time having to pay annually higher taxes on it?
Stephanie Do: I think this is a Pandora’s box situation. What has come out from the housing boom in the past couple years, it hasn’t come back into that box and constituents are still dealing with high property tax liabilities or even just perceived high property tax liabilities. So I don’t think that the changes with the interest rate are going to change the fact that there have been much higher tax liabilities with property, especially residential property, and legislators are going to want to respond to that.
Paul Jones: Well, so let’s shift from discussing the most tangible of property, that being real estate, to the polar opposite, which is digital products, and I guess to some degree services, and states’ continuing effort to try and figure out how to tax those. Are we waiting for a breakthrough here or is this going to be an incremental process? Is the Multistate Tax Commission going to come through with some guide that provides sort of a common basis for states to pursue taxing this or are we just going to watch an iterative approach as states try to come up with a new method of taxing digital goods and, like I said, digital services?
Stephanie Do: As you mentioned, the MTC has taken on a project recently within their uniformity committee to try to get a better understanding of state taxation of digital products. And it is a behemoth of a project. And the MTC staff has provided the state tax community with a lot of information and data to consider as we look at the state taxation of digital projects. Two points stick to my mind with the project and the discussion surrounding it. First is how states currently address digital products. And it’s a huge range, from broad to narrow approaches. And the second was during the discussion of whether or not business inputs should be taxed, a big takeaway for me was, once a state taxes a digital business input, it’s extremely difficult to change course because that revenue is now relied upon.
What I hope is that this renewed discussion will highlight the importance of the work that already has been done in this space. And what I mean is the work done by Streamlined. This project emphasizes the importance of Streamlined, as did the Wayfair case, which unfortunately didn’t cause all the states to suddenly jump and join Streamlined. But I hope this digital products project within the MTC will add fuel to the fire to encourage states to participate and join in Streamlined. Until then, I anticipate states will continue to take a disjointed approach set in paths they’ve already set on since the onset of the digital age.
Paul Jones: Well, there’s more topics that we could talk about, Stephanie, but we obviously don’t have time to go over everything, but I know that the issues that we have discussed have pretty obvious implications. And on behalf of our listeners, I’d like to say first, thank you for taking time to share your insights.
Stephanie Do: Thank you, Paul. Looking forward to talking to you again next year.
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