The Council of Economic Advisors, an agency nested within the Office of the President, has released an 18-page
"The harmful economic effects of state income taxes include outmigration, brain drain, stifled innovation and entrepreneurship, and reduced GDP," said the report.
The report calls out nine states that have no state personal income tax and notes that five of them "rank amongst the top 10 states in terms of Gross Domestic Product growth over the past decade and four of them rank amongst the top 10 states in terms of net migration rates from other states."
The report picks up on a trend of states tinkering with their tax policies.
The Tax Foundation charts 43 states starting the year with new tax laws on the books with eight of those reducing their individual income tax.
Oklahoma now has three tax brackets instead of six, and Ohio is transitioning to a flat tax, where everybody pays the same rate, regardless of income.
The Tax Foundation has published a mixed review of the White House's report.
"The CEA is, in short, right about the benefits of reducing reliance on individual and corporate income taxes," said Jared Walczak, a Senior Fellow at the Tax Foundation. "But it goes badly awry in its rate calculations."
The CEA report leans into the notion of substituting state revenue derived from income tax to raising sales tax rates to an average of 6.23%, while the Tax Foundation estimates that a 17.51% increase would be needed to replace the lost revenue.
The CEA also assumes that for the numbers to work state government spending would only grow by no more than the rate of inflation for a 10-year period, but real GDP grows by 2.5% annually.
"Unfortunately, the CEA's calculations omit important factors and envision a sales tax base that violates federal law, among other serious impediments," said Walczak.
The CEA's plan calls for no sales tax on groceries, rent or anything currently being covered by an excise or selective tax. Gasoline, alcohol, and tobacco would all be excluded.
The Tax Foundation analysis maintains that under the CEA's proposal sales tax would be charged on healthcare, scholarships, internet access, church operating expenses, the value of services provided by nonprofits, and stamps.
"The portion of healthcare services not furnished by government is at least legally taxable, but the rest of the above is not, either due to a legal prohibition or the absence of any actual transaction," said Walczak.
"All of it, however, is counted as taxable consumption in the CEA's estimates, vastly overstating the potential tax base."
The motivation for CEA wading into state tax policy would seem attributable to the GOP core belief of tax cuts but relying on sales tax instead of income tax would be more of a tax shift.
The federal government is also
Determining who qualifies for the no-tax on qualified overtime for state employees is proving to be especially problematic.
