State Tax Collections Increase as Economic Recovery Advances

Revenues up Nine Percent in 2011

Washington, DC, April 24, 2012—After two years of falling revenue, total state government tax collections increased by nearly 9% during 2011, according to a new analysis by the Tax Foundation. Using data recently released by the United States Census Bureau, economist Mark Robyn found that state collections totaled $757 billion last year, though that figure is still slightly less than the pre-recession levels of 2007.

The recent increase in state tax collections is consistent with the gradual recovery from the so-called Great Recession,” said Tax Foundation economist Mark Robyn. “As economic activity picks up we expect to continue seeing increases in tax payments, in particular from sources like the corporate income tax, which is highly dependent on the health of the economy.”

While the recession caused a drop in state tax revenues across the board, some tax sources were more volatile than others. Examining changes in tax collections since 2000, it is clear that revenue from state corporate income taxes has by far been the most volatile over the last decade.

The individual income tax exhibited significant volatility over the last decade as well. Sales and excise taxes were more stable, though they were still subject to year over year declines during the recession. It ultimately remains to be seen where tax collection growth rates will stabilize as the economy continues to recover.

Tax Foundation Fiscal Fact No. 298, “State Tax Collections Rising in Post-Recession Recovery” by Alex Raut and Mark Robyn is available online.The Tax Foundation is a nonpartisan research organization that has monitored fiscal policy at the federal, state and local levels since 1937. To schedule an interview, please contact Richard Morrison, the Tax Foundation’s Manager of Communications, at 202-464-5102 or morrison@taxfoundation.org.