Douglas Tax Reform Plan "Excellent,"

The Good, the Bad And the Silly
Governing Magazine
June 2004
David Brunori’s Tax Talk

David Brunori is contributing editor for State Tax Notes and research professor of public policy at George Washington University.

"Now is the time to take stock of what kind of tax reforms our elected leaders have been suggesting over the past six months – and those proposals range from the ridiculous to the sublime.

"One of the soundest pitches came from Iowa Governor Tom Vilsack, whose plan had the potential to strengthen both the sales and corporate tax systems. … Vilsack also wanted to require combined reporting for his state’s corporations. Insisting that corporations include income from all related businesses in their tax returns is one of the most effective methods for strengthening the very weakened corporate tax. At least one other governor – Vermont’s James Douglas – joined Vilsack in calling for combined reporting. Douglas, cognizant of the need to make Vermont as business-friendly as possible, tied his proposal to a lowering of corporate and individual income tax rates. This was an excellent tax reform plan and, like Vilsack’s, it would have lowered rates and broadened the base.

"But it was not to be. Combined reporting has few friends and many powerful enemies. While unsuccessful, both Vilsack and Douglas should be applauded for their efforts to bring sanity to their beleaguered state tax systems."

**EDITOR’S NOTE: The Douglas Corporate Tax Fairness Plan that the author refers to was passed and signed into law.