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Ten States Looking to Raise Taxes: Do You Live in One?

April 10, 2009 · 7 comments

With revenues plummeting and federal aid in short supply, many states are scrambling to fill holes in their budgets. The easiest way to do it? Raise taxes.

At least ten states are considering major increases in the near future. They are:

  • Arizona
  • Connecticut
  • Delaware
  • Illinois
  • Massachusetts
  • Minnesota
  • New Jersey
  • Oregon
  • Washington
  • Wisconsin

Two states have already implemented significant increases: California and New York.

That means that at about a quarter of all states are raising taxes to meet budget shortfalls. If you take those that don’t have income taxes out of the equation, it’s closer to a third. The bad news is that number is expected to climb.

Adding to the income tax woes are shortages in sales tax revenue. Sales tax revenues are at their lowest in years, fueled by a general decline in the sales of taxable goods across the country. Some experts worry that increasing income taxes will only contribute to the drop in sales tax, creating even more problems.

It will be interesting to see what states follow… The number of federal mandates (like No Child Left Behind) has not decreased while funding for those programs has. Add that to increasing jobless claims and foreclosures (and those related costs) and many states will have bigger problems, not fewer. Is your state next?

{ 7 comments… read them below or add one }

1 JN April 10, 2009 at 12:07 pm

New York has only proposed an increase in its most recent budget on top earners – I don’t think it’s final yet (although it’s coming for sure). Interestingly, the increase would just bring New York state in line with the rates in New Jersey for high earners (unfortunately those of us who live in New York City get the added pleasure of paying city tax).

2 Brigitte April 10, 2009 at 12:09 pm

Vertex recently released their 2008 Sales Tax Rate Report. You may want to check out the press release and data: http://www.vertexinc.com/PressRoom/PDF/2009/Vertex-Report-Details-2008-Sales-Tax-Rate-Changes.pdf

3 Oxnate April 10, 2009 at 12:53 pm

The MN governor has vigorously opposed ANY tax increases. It would take bi-partisan agreement to increase taxes here.

4 Kelvin Kao April 10, 2009 at 5:35 pm

Our sales tax was increased by 1% here in California. I don’t think it has major impact on me. Say if I spend 10 bucks on dinner. The tax is increased by 10 cents, which makes no major difference to me. However, I think this sales tax increase really make people think twice before they spend, especially on bigger items.

I also think it’s bad for restaurants. For example, say if I calculated my meal plus tax plus tips it comes out to something like $9.20. I will normally round it up and put down $10. Now with the tax increase, this will come out to $9.30 (roughly). I am still going to put down $10. It made no difference on my part, but the government now has taken 10 more cents while the restaurant/waiters lost 10 cents. For me it’s just 10 cents, but for restaurants, this adds up. I think this tax increase is really not good for businesses.

5 Jansen April 11, 2009 at 2:33 pm

I knew Minnesota would be on the list!

6 garagefather April 13, 2009 at 9:22 am

I am sure all these legislatures will rush to lower the taxes back down when the economy recovers. Yeah right!
This is a perfect time for states to massively cut their bloated budgets and to create a more efficient government, but they instead are desperately seeking ways to maintain the status quo as if the status quo wasn’t part of the problem.

7 David Flodquist June 12, 2010 at 7:29 pm

What happened to Obama’s stimulus money ?? What happened to all the T.A.R.P. money that was supposed to be used to subsidize our country’s failing economy ?? What happen to the promises that Obama made re. no tax raises in our country when campaigning for president ?? Why is Obama still getting away with lying to and deceiving Americans. Why is Obama turning his head on…1. protecting our country & Americans…2. Oil spill…3. Border security…4. Iran & Iraq…5. Isrial…6 . Educational facilities funding…7. N.A.S.A. Space Program funding…8. What happened to unemployment & job creation…9 . Why did Obama hire so many felons to his staff & congress….10. WHY IS THIS COUNTRY & AMERICANS IN THE WORST POSITION the U.S.A. has ever experienced ??

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