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NY one of the worst again-as usual-States where Taxes are rising the most

July 5, 2010

States Where Taxes Are Rising the Most

By Rick Newman
Posted June 30, 2010

In Washington, the “T” word is political dynamite. New federal taxes are inevitable at some point, thanks to the gargantuan federal debt—just not yet. The only new taxes enacted by the feds recently have been on wealthy earners and on institutions like banks and health insurers, which politicians can easily vilify, yet which are inevitably passed on to the consumer. Other than that, they’d rather not talk about it.

But many Americans are paying higher taxes anyway because states can’t borrow the way Washington can or put off the day of reckoning. The listless economy has shredded state budgets, forcing tough decisions nationwide about whether to slash services, raise taxes, or both. Last year’s big federal stimulus package helped, sending about $250 billion to states. But that emergency funding is starting to peter out and tax increases passed during the recession are finally starting to hit people’s wallets.

Over the last two years, 36 out of 50 states have raised taxes or fees, according to data from the National Association of State Budget Officers. The combined tab comes to more than $25 billion. The worst seems to be over, with proposals for the upcoming year amounting to just $3.1 billion in new state taxes. But those figures are premised on a steadily improving economy, which means new taxes could end up a lot higher if there’s a dreaded double-dip recession. And many local municipalities are just getting around to raising their own taxes, since state and federal aid to many local governments is falling. In Congress, for instance, new aid packages that would prevent teacher layoffs and help pay for Medicaid have stalled, as opponents argue that the federal government can no longer afford such generosity.

To figure out where the pain is greatest, I used NASBO data to compile the total tax hikes in each state since 2009, including proposed tax increases for 2011. Then I divided each aggregate figure by the state’s population, based on Census Bureau data, and ranked the states according to the amount of new taxes per person. The per-capita numbers don’t mean every resident is forking over the same higher amount, since taxes are often skewed toward wealthy people and businesses. But they do reveal which states are in the most pain, and the types of new taxes passed in those states could find their way to others. Here are the states with the highest per capital tax hikes since 2009, along with some of the notable new taxes they’ve imposed:

New York. Total enacted and proposed new taxes, 2009–2011: $8.2 billion; $419 per person.

Enacted: Higher taxes on the wealthy and on tobacco, beer and wine, car rentals, and taxi rides; increased fees on motor vehicles, hospital stays, car insurance, tax preparation, utilities, and several other things; reduced tax credits for a variety of businesses.

Proposed: Additional taxes on cigarettes; new taxes on certain small businesses, soft drinks, and some medical services.

California. Total: $11.5 billion; $312 per person.

Enacted: 1 percentage point increase in the sales tax and a quarter-point increase in personal income taxes. Lower business tax credits; new fees on motor vehicles, vessels, and aircraft.

Proposed: A net decrease in gas and diesel taxes.

Delaware. Total: $253 million; $286 per person.

Enacted: 1 percentage point increase in taxes on incomes above $60,000; higher taxes on cigarettes, video lottery, utilities, and some businesses. New estate tax.

[See how all the states rank in terms of higher—and lower—taxes.] 

New York ranks the worst per-capita, and second worst overall.

State New and proposed taxes since 2009, millions of dollars New taxes per person
New York 8,179 $419
California 11,545 $312
Delaware 253 $286
Connecticut 777 $221
Wisconsin 900 $159
Arizona 1,014 $154
Kansas 425 $151
Washington 982 $147
Oregon 541 $141
Massachusetts 890 $135
New Hampshire 161 $121
Nevada 296 $112
Colorado 537 $107
North Carolina 983 $105
Hawaii 125 $96
Rhode Island 96 $91
Minnesota 439 $83
Maine 93 $71
Michigan 504 $51
Tennessee 265 $42
Kentucky 159 $37
Florida 553 $30
Mississippi 84 $28
Utah 77 $28
Iowa 70 $23
New Mexico 44 $22
Illinois 220 $17
Georgia 150 $15
South Dakota 6 $7
Maryland 33 $6
New Jersey 50 $6
Arkansas 16 $5
Virginia 9 $1
Texas 16 $1
Pennsylvania 2 $0
Idaho 0 $0
Montana 0 $0
Oklahoma 0 $0
South Carolina 0 $0
Wyoming 0 $0
Nebraska -1 -$1
Missouri -15 -$2
Alaska -2 -$3
Alabama -13 -$3
Louisiana -73 -$16
West Virginia -80 -$44
Indiana -321 -$50
Ohio -1,220 -$106
North Dakota -195 -$301

Note: The data are from the beginning of fiscal year 2009, which began July 1, 2008, in most states. The recession technically began in December 2007, which would not have started to affect state budget decisions until the following year.

The global economy is mysterious, even scary. U.S. News Chief Business Correspondent Rick Newman connects the dots.


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