State Tax Revenues Still Unstable

August 31, 2010 Taxation in USA

Silver QuarterOverall tax revenue figures for US states have risen for the second straight quarter in 2010, however total collections are still lagging behind their pre-recession levels, lending uncertainty to future results.

Overall state tax revenues for the April – June quarter of 2010 are 2.2 percent higher than in the same period of the 2009 year (or, 1.4 percent when adjusted for inflation), according to the Rockefeller Institute’s latest State Revenue Report, released August 30th. However, based on preliminary state tax data, the collections were still 17.2 percent lower than in the same time-frame of 2008.

The national increase for the period consisted of a 1.6 percent rise in collections of Personal Income Taxes (PIT), a 5.9 percent improvement in Sales Taxes figures, and an 18.8 percent drop in Corporate Income Tax (CIT) collection. Although, the growth in personal income tax revenues can be attributed largely to legislative tax increases in the state of California, without which the national level would be reduced to a 1.1 percent decline.

Based on preliminary state provided tax data, overall collections in Alaska were the highest growing in the country, with a level of 106.3 percent. In dollar terms, the state of Florida showed the most improvement with an approximate USD 766 million collections rise, primarily due to 14.5 percent growth in the CITs. Wyoming reported the greatest overall decrease, at 28.2 percent, followed by Louisiana, with a level of 22.1 percent. Of the 47 states with available data, 17 declared overall revenue declines.

While the results are relatively positive for the country, there were too many state-level declines to rule out economic uncertainty for the remainder of 2010. Persistently low CIT collection levels, and variability in other taxes imply that final collection figures for the 2010 year could still come out negative.

Photo by LarimdaME