Earlier this week, the Census Bureau released its Quarterly Summary of State and Local Government Revenue for the first quarter 2008. The Rockefeller Institute of Government has parsed through the data and put together a report of findings. Some facts:
- State taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. revenue is up 1.7 percent in the first quarter of 2008, as compared to the first quarter of 2007. This is the slowest rate since 2003, but still positive. For this fiscal year, revenue is up 3 percent over last year.
- State personal income tax revenue increased 4.4 percent over first quarter 2007.
- State corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. revenue declined 5.1 percent over first quarter 2007.
- State sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. collections were flat, declining 0.04 percent over first quarter 2007.
- In total states collected $155.3 billion in the first quarter 2008, comprised of $64 billion (41%) in income taxes, $55 billion (35%) in sales taxes, about $10 billion in corporate income taxes (7%), and $26 billion in other taxes and fees.
At a recent hearing, Rep. John Conyers (D-MI) stated that “many [states] are insolvent.” States may not be enjoying the revenue boom of prior years, but they’re not quite as bad as that. It must be noted, though, that some of the revenue increase comes from recently enacted tax increases. But reports that states are collapsing financially are a bit premature.
More on state taxes and policy here.
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