State Policy Reports

The federal government has been heavily involved in highway construction for decades. Since 1956, the Highway Trust Fund has been used to collect federal transportation tax revenues and finance transportation projects around the country. Tax revenues are redistributed to states as grants, awarded based on federally determined program allocations and funding levels. However, this program structure has created funding disparities for some states and skewed incentives for all of them. Consequently, the idea of devolving the federal highway system to states gets aired every so often.

A number of states are reportedly contemplating major reductions in their personal income taxes, or even outright elimination of the tax. One group of experts argues that states with lower tax rates have experienced stronger economic growth, while another challenges those findings. Reports suspects that economic growth over the period in question had more to do with state reliance on specific industries that were doing well (e.g., natural resources, the federal government) or poorly (e.g., automobiles) than it had to do with tax policy.