"The Institute on Taxation and Economic Policy (ITEP) has a proposal for Florida, Nevada, and five other states that do not impose an income tax: Swap a chunk of your sales tax for an income tax and Uncle Sam will foot much of the bill.
That’s the basic premise of Leaving Money on the Table, a joint effort of ITEP and United for a Fair Economy's Tax Fairness Organizing Collaborative, which argues for a "revenue neutral" shift from sales taxes to income taxes in seven states.
Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming rely on sales taxes to make up for their lack of a personal income tax, according to the report. By adopting a progressive graduated-rate income tax, of between 4.5 percent and 6.5 percent, and offsetting it with a reduction in the sales tax, those states could reduce their residents' federal income tax payments by as much as $5.5 billion. [...]"