What affects states’ PIT growth?
Elasticity of a state’s PIT determines how much it responds to growth (range 1.2-1.6)
- Highest elasticity PIT: CA, CT, NE, NM, RI
Type of income growth also affects elasticity. Current elasticities ~ 2.0+
- Income currently growing fastest at top of wage scale / tax brackets: # taxpayers, amount of non-wage income shooting up in recent years.