Is Your State Increasing Taxes?
This year, 10 states will significantly increase their income and sales tax to make up for budget shortfalls.
Arizona, Connecticut, Delaware, Illinois, Massachusetts, Minnesota, New Jersey, Oregon, Washington and Wisconsin. California and New York lawmakers already have agreed on multibillion-dollar tax increases that went into effect earlier this year.
Interesting observation that all but one of these states turned blue this election and usually vote Democrat. You would think that they would get the hint that democrats have difficulty budgeting and require massive tax hikes to make up for that fact.
Maryland had a surplus under Governor Erhlich and had solid approval ratings. But, Maryland, being liberal idiocracy, ousted Erhlich for the younger, more charismatic O’Malley, who of course was a liberal. O’Malley within his first year, before the market even crashed, put the state into a deficit. He began taxing everything under the sun to make up for this – even attempting to tax gym memberships, car repairs and computer repairs. Some of his ridiculous taxes passed – Maryland is now the 4th highest taxed state and one of the least business friendly states in the union (ranks 5th worst).
Many states will find out if they will have to increase taxes, cut spending, cut taxes etc. to figure out a plan going forward after seeing what the April 15th returns look like. States will have to gauge their plans going forward by what the result of tax day brings (besides tea parties).
While most states so far have managed to cope with dwindling cash by cutting spending and raising fees on things such as fishing licenses and car registrations, that is unlikely to be enough in the new fiscal years that generally begin July 1, many analysts said.
“Income taxes and sales taxes are the go-to taxes when you really need to raise a lot of money,” said Donald J. Boyd, who monitors states’ fiscal health for the Rockefeller Institute of Government in Albany, N.Y.
Raising taxes is a perilous proposition for lawmakers, who must balance their states’ budgets every year. Not only do they face political heat for increasing financial burdens during the recession, but added taxes risk worsening their states’ economic problems by, for example, further hobbling consumer spending. (Duh)!
Some lawmakers say they have little choice. “With the size of our budget gap, we are looking at a situation of closing down our courts, releasing prisoners and cutting the school year by as much as a month,” said Rep. Peter Buckley, co-chairman of Oregon’s joint Ways and Means Committee.
Little choice… They could choose to cut taxes on local businesses and corporations as well as propose a flat tax or put a freeze on certain spending. I guess because that doesn’t go along with the liberal train of thought (that idea of compromise during certain periods or climates) it will never happen in these blue states.
Legislators know the increases will be unpopular with residents. “There will be blame, we accept that,” Sen. Eileen M. Daily of Connecticut said earlier this month when she and fellow Democrats announced a budget that raises income-tax rates and expands the sales tax to raise more than $3 billion over the next two years. Connecticut Gov. Jodi Rell, a Republican, has said she would veto the plan.
Connecticut, amazingly enough, elected a Republican Governor, they are lucky that they have one who is willing to veto increased taxation from the majority Democratic Legislature.
But some governors are proposing tax increases. Delaware Gov. Jack Markell wants to raise the marginal income-tax rate by one percentage point, to 6.95%, on those earning more than $60,000 a year, effective in 2010. His budget plan also includes increases in corporate taxes as well as spending cuts to close a projected $750 million shortfall in a $3 billion budget, said spokesman Joe Rogalsky.
Many states remain determined to balance their budgets by relying solely on spending cuts. That is the case in Indiana, where raising revenue “is really not on the table,” said Pat Bauer, the speaker of the state House.
Good for Indiana!
BTW – I thought the stimulus was supposed to take care of a lot of this pain and agony with state budget shortfalls?
Economic Update: Bartering Is Cool, George Soros Speaks and G20 Leans on Global Currency
The Great Depression brought various methods to the fold in order to keep some type of currency flowing and people consuming. In many ways this is being called the “Great Recession,” and there still is that feeling in the air that a Great Depression may again be heading our way. However, some of these old systems such as the barter system or local currencies are being used again.
The barter system became popular in recent years and has become more modernized for today’s society. Craigslist became incredibly popular when it first began but during these pressing times, Ebay and Craigslist have seen more traffic than usual and one statistic earlier this month had the traffic for Craigslist up by 100%. New barter sites are popping up during this downturn such as www.tradeaway.comwhere you can sell and buy real estate, boats, cars, land, etc. Even Match.com’s traffic has soared, because young people who may or may not be let go first if a company needs to downsize (due to less tenure on the job) say that dating sites are cheaper than going out to bars to meet people.
I find it incredibly intriguing that local communities have begun using a method from the Great Depression in which they issue and name their own “currency.”
The systems generally work like this: Businesses and individuals form a network to print currency. Shoppers buy it at a discount — say, 95 cents for $1 value — and spend the full value at stores that accept the currency.
Workers with dwindling wages are paying for groceries, yoga classes and fuel with Detroit Cheers, Ithaca Hours in New York, Plenty in North Carolina or BerkShares in Massachusetts.
This type of currency encourages consumers to buy and it also encourages consumption at a local level to support local businesses that are also cash-strapped.
This could be a good thing for people to see value in limited government. Local and state government, or Federalism, is truly the more appropriate form of government rather than a larger centralized organization.
However, you still have to pay your taxes on it…
By law, local money may not resemble federal bills or be promoted as legal tender of the United States, says Claudia Dickens of the Bureau of Engraving and Printing.
“We print the real thing,” she says.
The IRS gets its share. When someone pays for goods or services with local money, the income to the business is taxable, says Tom Ochsenschlager of the American Institute of Certified Public Accountants. “It’s not a way to avoid income taxes, or we’d all be paying in Detroit dollars,” he says.
Many still feel that bad times are ahead for the United States, our economy and the dollar.
George Soros is echoing what many conservatives and libertarians have been saying the past few months with the incessant government spending and bailouts. He foresees the U.S. becoming much like Japan in the 90′s, where they continued to spend in order to try and dig themselves out of a collapse, and their interventionist policies actually made things worse. Soros said that he believes the United States will go throw a period of relatively low growth coupled with high inflation…DUH!
Thank you Captain Obvious!
The recovery will look like “an inverted square root sign,” Soros said. “You hit bottom and you automatically rebound some, but then you don’t come out of it in a V-shape recovery or anything like that. You settle down—step down.”
“I don’t expect the U.S. economy to recover in the third or fourth quarter so I think we are in for a pretty lasting slowdown,” Soros said, adding that in 2010 there might be “something” in terms of U.S. growth.
The healing of the banking system and housing markets is crucial to recovery. “The banking system, as a whole, is basically insolvent,” Soros said.
“What we have created now is a situation where the banks who will be able to earn their way out of a hole, but by doing that, they are going to weigh on the economy,” he said. “Instead of stimulating the economy, they will draw the lifeblood, so to speak, of profits away from the real economy in order to keep themselves alive. This is the zombie bank situation.”
