RED STATES MOVE TO SLASH TAXES

(Reuters) - Hopes for overhauling the federal tax system are fading in Washington, but in some state capitals, tax reform experiments - some far-reaching - are fast taking shape. Across the South and Midwest, Republicans have consolidated control of state legislatures and governorships, giving them the power to test long-debated tax ideas. Cutting income taxes and shifting the overall tax burden to consumption through higher sales taxes is a long-standing goal of some tax theorists. Critics argue that approach is regressive and unfairly burdens the middle class and the poor, who spend more of their earnings on items subject to sales tax. Thirty-seven of the 50 states now have single-party control of legislatures and governorships: 25 Republican, 12 Democratic. In those states, unlike Capitol Hill, partisan gridlock is not a big issue, making difficult projects such as tax reform easier. In an interview with Reuters, Laffer said states with lower income tax burdens outperformed those with higher taxes.