Excerpts: The Highest Tax Increases Ever. State and local governments demand that their residents shut up and pay up during a recession, By Jim Geraghty
State governments know we’re in a recession, and they know you’re hurting. That’s why they’re demanding more from you. . . while Obama has enacted only one major tax increase this year — raising the tobacco tax nearly 62 cents on a pack of cigarettes, to $1.01 — state and local governments have responded to the recession by essentially lifting up their citizens, turning them upside down, and shaking them until all their remaining pocket change falls out.
A new survey of state governments shows that 29 states enacted tax and fee increases this year that are expected to take almost $24 billion from their residents.
Sales-tax increases are common: They will raise an extra $4 billion in California, $889 million in Massachusetts, and $803 million in North Carolina. Income taxes are going up, too: The hikes are expected to generate an additional $4 billion in New York, $1.01 billion in New Jersey, $617 million in Connecticut, $278 million in Wisconsin, and $235 million in Oregon. Higher corporate-income taxes will boost revenues by $110 million in Connecticut, $130 million in Delaware, and $25.8 million in Tennessee. Higher gas taxes will yield an additional $33.9 million in Alaska, $6 million in Maine, $2.4 million in New Hampshire. . .
How did states get into this mess? Over the past two decades, most states enacted gargantuan increases in spending. . . The nominal increases (not accounting for inflation) were often much higher (for example, 9.4 percent in 2007). Total spending by all states is estimated at $1.23 trillion this year; in 2004, it was $1.01 trillion; a decade ago, in 1999, it was a little over half what it is today, a mere $693 billion.
While this year’s tax increases are the worst — by a lot — it’s not as if state tax and fee revenues have declined in recent years. They’ve increased every year since 2002, except for a 2.1 percent decline in 2007. . .