The Six States Where Taxes Are Soaring

Print Email

4. New York
> Increase in personal income tax: more than 5%
> Expenditure per capita (2008): $5,353 (12th highest)
> 2009 budget shortfall: 13.2% (16th highest)
> Home price decline from peak: 8.3% (16th smallest)

According to the Tax Foundation, New York has been spending approximately 144% more per person each year than it did in 1977, the first year with recorded data. In 2009, New York spent $18,126 per pupil, more than any other state. It also spent $9,056 per Medicare recipient, also more than any other state.

When creating the fiscal year 2012 budget, legislators confronted a $10 billion deficit, or 17.6% of the total available funds. For that budget, the state was forced to cut funding for the SUNY colleges by 7.6%. Yet, these cuts, and others like it, have not been enough to balance the budget. The state has raised tax revenues by at least 9% between 2009 and 2011, partially by increasing personal income and cigarettes taxes by 5% or more.

5. Rhode Island
> Increase in personal income tax: between 1% and 5%
> Expenditure per capita (2008): $6,093 (5th highest)
> 2009 budget shortfall: 26.6% (3rd highest)
> Home price decline from peak: 27.0% (7th largest)

Between 1977 and 2008, the state of Rhode Island has doubled its spending to $6,093 per person. The increase was driven by some of the biggest state programs in the country. In paying out unemployment benefits, the state covers 46.5% of weekly wages, the second-highest percentage of any state. Rhode Island is also among the top ten per capita spenders for education, Medicaid, and pensions.

According to Brookings, the state’s tax revenue has been declining for decades as a result of a loss of manufacturing jobs. The slowing economy rebounded briefly during the housing boom leading up to the recent recession. Unfortunately, the real estate market collapse has put the state in an even worse position than it was before. Rhode Island has been forced to make across-the-board cuts in spending as well as increase taxes. The state increased cigarette taxes by more than 5%, and it raised personal income tax between 1% and 5%.

Also Read: American Cities Where Manufacturing is Booming

6. Wisconsin
> Increase in personal income tax: more than 5%
> Expenditure per capita (2008): $3,990 (21st highest)
> 2009 budget shortfall: 11.7% (20th largest)
> Home price decline from peak: 12.8% (16th smallest)

Compared to the other states on this list, Wisconsin was not hit as hard by the recession. Home prices declined a more manageable 12.8%. Just 4.9% of homes were either in foreclosure or delinquency at the end of last year. As of March, the state had an unemployment rate of just 6.8%, the 17th-lowest in the country. Despite all of these positive economic signs, Wisconsin has still had budget difficulties.

In 2009, Wisconsin’s budget shortfall was better than the most of the states, at 12.8% of the general fund. However, that gap has worsened each year. In 2010, the shortfall was 23.7%, tied for 22nd-highest in the country. By 2011, the gap had reached 24.9% of available funds, the fifteenth-highest in the U.S. In an attempt to raise tax revenue, the state increased income taxes and cigarette taxes at least 5% between 2009 and 2011. The state also raised sales taxes substantially during that time.

Editors Note: 24/7 Wall St. relied on data compiled by Brookings Institution to identify the six states that have increased the percent of revenue from taxes by over 9%. Brookings has since revised that data based on new information which was not available to it or 24/7 Wall St. at the time of publication. An earlier version of this article identified West Virginia as one of the states that had increased the percent of revenue from taxes by over 9%. In fact, according to the Brookings’ revision, West Virginia decreased the percent of its revenue from taxes by less than 1%. Also according to the Brookings’ revision, Wisconsin, which was not included in 24/7 Wall St.’s original article, had its percent of revenue from taxes increase by more than 9% and is now included in 24/7 Wall St.’s coverage.

Michael B. Sauter and Ashley C. Allen

RSS Facebook Twitter