Kirk Stark (UCLA) presents The Federal Role in State Tax Reform at Indiana-Bloomington today as part of its Tax Policy Colloquium Series organized by Ajay K. Mehrotra.  Here is part of the Introduction:

This paper considers the federal government’s role in the design of state tax systems and asks what policy changes might be warranted so as to more effectively advance the federal interest in state tax reform. It begins with four observations and then asks a question. The four observations are as follows:

1. The federal government has an interest in minimizing the frequency and severity of state fiscal crises.
2. One of the key factors underlying state fiscal crises is revenue volatility.
3. The degree of revenue volatility that states experience is a function (in part) of tax mix—i.e., some tax structures are more volatile than others.
4. State tax mix is a function (in part) of federal policies and those policies, as presently designed, generally favor the adoption of volatile state tax systems.

The question that follows from these observations is: should the federal government play a more direct and proactive role in the design of state tax systems so as to minimize fiscal crises and promote the long-term fiscal sustainability of state and local governments? From that question several additional lines of inquiry naturally ensue. If a greater federal role in state tax reform is warranted, what sort of “intergovernmental tax policy” should the federal government adopt? What principles should motivate the design of an intergovernmental tax policy? What specific changes to existing law might be most warranted and feasible?