At both the federal and state levels, the GOP won a number of game-changing races that will impact state and local tax policy in 2011 and beyond.  Of the 37 gubernatorial races held in 2010, Republicans won 23.  All six Republican incumbents won; Republicans defeated Democratic incumbents in two of the seven other incumbent races.  Further, the following state legislative chambers switch from “D” to “R” – Alabama (House and Senate); Indiana (House); Iowa (House); Ohio (House); Maine (Senate); Michigan (House); New Hampshire (House and Senate);  North Carolina (House and Senate);  Pennsylvania (House); New York (Senate); Minnesota (House and Senate); Montana (House); Colorado (House).  Only the Oklahoma Senate switched from Republican to Democrat controlled. 

These results will affect states’ willingness to enact significant state tax legislation, such as combined reporting, sales tax base expansion, and aggressive nexus legislation, to name a few.  Of course, Republicans’ historical temperance towards new taxes will be juxtaposed against the states’ ever-present budget shortfalls. At the federal level, Republican gains may hamper the Main Street Fairness Act because some right-leaning policy groups view the Streamlined Sales and Use Tax Agreement as a “new” tax. Look for a more detailed analysis from Sutherland of the 2010 elections and state tax issues in the near future.