[Vision2020] raising taxes (and fees) in a recession

[JLBrown]

Visionaries,

 

The Center on Budget and Policy Priorities has just released a paper looking
at which states have raised taxes (and fees) during this recession to help
balance their budgets.  I have cut and pasted an excerpt below.  A couple of
things that caught my eye were that Wisconsin closed some tax exemptions and
broadened the sales tax base, things Idaho is sorely in need of doing, and
that Virginia increased its corporate income taxes. Several years ago
Micron, which has been a major cause of job losses in Idaho, opted to build
a plant in Virginia rather than to expand in Idaho.  At the time Micron said
it was because Virginia's education systems were stellar, but stellar
education systems cost money.

 

I imagine this paper will be revised after more of the states finish their
legislative sessions, and then Idaho will be included as having raised some
new revenue because vehicle fees and a couple of other things were raised a
little in the going-home transportation package.

 

Judy Brown 

 


>From "Tax Measures Help Balance State Budgets" released today by the Center
on Budget and Policy Priorities


Tax Increases in the Current Recession


State tax increases began with the recession's onset in late 2007, in order
to preserve education, healthcare, and other services in the face of
flattening or declining revenues. At least 10 states enacted tax and revenue
measures in late 2007 or 2008. These included major revenue packages in
Maryland, Michigan, and New York, and somewhat narrower measures in Alabama,
California, Delaware, Massachusetts, New Hampshire, New Jersey, and Rhode
Island.

As the recession has lengthened and budget shortfalls deepened, states have
increasingly turned to raising taxes as part of the mix of responses. So far
this year, 16 states have enacted tax increases, and (as of May 5) another
17 are considering such measures. (See Figure 1.)


Enacted Tax Increases In 2009


Major tax increases enacted to date include those in California, New York,
and Wisconsin.

*	Faced with a $13.8 billion shortfall in the coming fiscal year, New
York adopted a budget that includes both cuts in services and tax increases.
The revenue increases included two new temporary income tax rates levied on
the highest-income filers.

New York also placed limits on itemized state income tax deductions for
taxpayers making over $1 million, reduced a state-funded credit on New York
City's personal income tax, eliminated a property tax rebate, and expanded
sales tax collections on Internet purchases.
*	Similarly, California's budget for the upcoming fiscal year includes
temporary tax increases as well as budget cuts. The package includes a one
percentage point increase in the state sales tax; a 0.25 percentage point
increase in state income tax rates; a reduction in a tax credit for
dependents; and raising the Vehicle License Fee (a tax on the value of cars
and trucks) to 1.15 percent from 0.65 percent.[1]
<http://www.cbpp.org/cms/index.cfm?fa=view&id=2815#_ftn1>  In total, tax
increases will raise about $12.5 billion in new revenues through June 30,
2010.
*	Wisconsin enacted a number of measures to raise new revenue by
broadening what is covered by the state's sales and corporate income taxes.
Measures affecting the sales tax include: ending the exemption for digital
downloads; altering the method of taxing prewritten computer software; and
entering into the multi-state Streamlined Sales and Use Tax Agreement
(SSUTA) - a compact that simplifies sales tax collections for participating
businesses. Additionally, state officials recently enacted new hospital
assessment fees, which are expected to raise about $310 million in fiscal
year 2010. A measure known as "combined reporting" that expands the
corporate income tax base to tax in-state and multi-state corporations more
equivalently was also enacted.
*	Hawaii increased income tax rates for the highest-income taxpayers.
The new top rate is 11 percent and applies to taxable income over $400,000
for married couples and $200,000 for single taxpayers; it is effective for
tax years 2009 through 2015. Hawaii also increased hotel taxes, real estate
transfer taxes, and tobacco taxes.
*	Virginia raised revenues by restructuring an income tax credit and
taxing some investment income of corporations.
*	Colorado's governor signed legislation increasing vehicle fees and
hospital fees, and reducing the rate at which the state reimburses retailers
for collecting sales taxes.
*	Arkansas, Kentucky, Rhode Island, and Wyoming approved increased
excise taxes on alcohol products, tobacco products, or both.
*	Various other taxes or fees were increased in Georgia, Iowa,
Maryland, Nevada, South Dakota, and Utah.

 

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