Missouri’s legislature has approved nearly $2 billion in tax incentives for Boeing after a House vote today, and the plan awaits Governor Nixon’s (D) signature. We’ve written on this issue extensively, following it from...
- The Tax Policy Blog
- Updates to State Individual Income Tax Rates Table
Updates to State Individual Income Tax Rates Table
The first half of 2009 was a busy time for state legislatures. The deteriorating economic situation resulted in decreased tax revenues during 2008 and 2009, and as a result many states that had not taken previous opportunities to prepare themselves for bad economic times were facing budget shortfalls as the fiscal year wound down. In response some states cut actual or projected spending levels, but a handful also had to raise taxes to maintain their desired levels of spending.
In order to keep abreast of these changes, some of which are rather significant, we have updated our online state income tax table, effective July 1, 2009. States with significant income tax changes include Hawaii, California, New Jersey and Oregon. We will be updating more online tables soon, including excise tax, sales tax, and corporate income tax tables.
States have focused largely on two areas for their tax increases: personal income taxes and excise taxes. More specifically, most states that have increased personal income taxes have targeted these increases at high income earners (sometimes called "millionaires' taxes") in an effort to stem the tide of falling revenue. Some of these increases are temporary (or at least are being called temporary right now) and some are permanent. As we have discussed before, while these types of tax increases can bring a revenue gain in the short-term they can be damaging for a state’s long-term economic growth and can exacerbate revenue volatility problems.
It should be noted that while few states were unaffected by the economic downturn, only a minority of states have resorted to tax increases. Some states took the opportunity during the good economic times to plan for bad economic times and so were able to avoid tax increases that could be damaging in the long term. Some, like Vermont, North Dakota, and Maine were even able to reduce income tax rates. Others, like California, have tax systems that lead to volatility in revenue and spending practices that cause them to be more sensitive to inevitable fluctuations in the economy.
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