Huge tax increases for New york and 9 other states

[jameznyhc]

* APRIL 9, 2009, 7:41 A.M. ET


By LESLIE EATON

A free fall in tax revenue is driving more state lawmakers to turn to broad-based tax increases in a bid to close widening budget gaps.

At least 10 states are considering some kind of major increase in sales or income taxes: Arizona, Connecticut, Delaware, Illinois, Massachusetts, Minnesota, New Jersey, Oregon, Washington and Wisconsin. California and New York lawmakers already have agreed on multibillion-dollar tax increases that went into effect earlier this year.

Fiscal experts say more states are likely to try to raise tax revenue in coming months, especially once they tally the latest shortfalls from April 15 income-tax filings, often the biggest single source of funds for the 43 states that levy them.
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* Chart: See state-by-state details on tax revenue and budget deficits

The squeeze is especially severe in states hit hardest by the recession, such as Arizona, where sales-tax revenue has fallen by 10.5%, income-tax collections are down 15.7% this fiscal year, and the government faces a $3.4 billion budget gap next year. But such shortfalls are likely to be widespread; federal income-tax receipts from individuals have dropped more than 15% in the past six months, according to Congressional Budget Office estimates.

While most states so far have managed to cope with dwindling cash by cutting spending and raising fees on things such as fishing licenses and car registrations, that is unlikely to be enough in the new fiscal years that generally begin July 1, many analysts said.

"Income taxes and sales taxes are the go-to taxes when you really need to raise a lot of money," said Donald J. Boyd, who monitors states' fiscal health for the Rockefeller Institute of Government in Albany, N.Y.

Sales-tax revenue has fallen more sharply than at any time in the past 50 years, Mr. Boyd said, and he expects income-tax collections to drop below levels state officials projected -- though the extent of the damage probably won't become clear until May.
[quarterly state tax collections]

Raising taxes is a perilous proposition for lawmakers, who must balance their states' budgets every year. Not only do they face political heat for increasing financial burdens during the recession, but added taxes risk worsening their states' economic problems by, for example, further hobbling consumer spending.

Some lawmakers say they have little choice. "With the size of our budget gap, we are looking at a situation of closing down our courts, releasing prisoners and cutting the school year by as much as a month," said Rep. Peter Buckley, co-chairman of Oregon's joint Ways and Means Committee.

His committee is considering an income-tax increase on high-earners, along with major budget cuts, to help close a projected $4.4 billion budget gap over the next two fiscal years. And things could get worse after a revenue forecast due out May 15, he said, because Oregon's unemployment rate has climbed to 10.8% and the state relies on income-tax revenue.

Oregon Gov. Ted Kulongoski is likely to support the surcharge, said a spokeswoman , because the state is faced with losing as much as a third of its tax revenue.

Legislators know the increases will be unpopular with residents. "There will be blame, we accept that," Sen. Eileen M. Daily of Connecticut said earlier this month when she and fellow Democrats announced a budget that raises income-tax rates and expands the sales tax to raise more than $3 billion over the next two years. Connecticut Gov. Jodi Rell, a Republican, has said she would veto the plan.

But some governors are proposing tax increases. Delaware Gov. Jack Markell wants to raise the marginal income-tax rate by one percentage point, to 6.95%, on those earning more than $60,000 a year, effective in 2010. His budget plan also includes increases in corporate taxes as well as spending cuts to close a projected $750 million shortfall in a $3 billion budget, said spokesman Joe Rogalsky.

Many states remain determined to balance their budgets by relying solely on spending cuts. That is the case in Indiana, where raising revenue "is really not on the table," said Pat Bauer, the speaker of the state House.

Instead, he hopes to tap the state's rainy-day fund and to produce a budget that covers only one year, rather than the usual two, because plunging revenue makes it impossible to forecast that far in advance.

Tax collections have dropped drastically the past four months, according to Christopher A. Ruhl, director of the Indiana Budget Agency. Income-tax collections, which reflect withholding and estimated tax payments, fell 21% in March compared with last year and are down 7% for the fiscal year.

States have lowered revenue forecasts repeatedly in recent months, yet the estimates still seem to exceed the grim reality. Last week, Pennsylvania officials said total March tax collections were $334.6 million, or 7.9%, short of expectations, due to sharp drops in income and sales taxes and a steep decline in corporate income taxes. For the fiscal year that began July 1, 2008, collections to date are running $1.6 billion less than forecast.

This has led some experts, such as Nicholas Johnson of the left-leaning Center on Budget and Policy Priorities, to predict more legislatures will take up broad-based tax increases as early as May or June. "The problem," he said, "is that they are filling a hole that has gotten a little deeper."

Write to Leslie Eaton at leslie.eaton@wsj.com

[jameznyhc]

by the time all is said and done anyone wealthy will be lucky to take home 40% .. includuing cap gains, income tax state, income tax fed,state fees, and service taxes .. next year after bush tax cuts expire


ALBANY - Gov. Paterson and legislative leaders have settled on a hike in the personal income tax beginning with people who earn $250,000, the Daily News has learned.

At the same time, New York City is poised for at least one win in the coming state budget as lawmakers have agreed to reinstate $328 million in municipal aid that Paterson sought to eliminate, sources said.

Under the controversial income tax plan, which would raise $4 billion, the current top income tax rate of 6.85% would jump to 7.85% for singles making $250,000 and families making between $300,000 and $500,000.

Singles and families making more than $500,000 would pay a new state top rate of 8.97%.

Lawmakers added the top rate of $500,000 instead of $1 million that had been discussed after realizing the prior plan would not raise the needed $4 billionto help close the state's projected $16.2 billion deficit.

The income tax increase, which would expire after three years, had been mentioned as a "last resort" by Paterson and Senate Majority Leader Malcolm Smith.

But it was seen as inevitable after the state's deficit ballooned by another $2.2 billion in recent weeks.

A Senate Democrat's effort to tie the income taxes to property tax relief seemingly died.

Paterson on Friday did not express opposition to an income tax hike, saying some of the cuts being considered are "life-threatening."

The influential Working Families Party and rank-and-file Democrats have argued for months the rich should do more to help the state deal with its fiscal crisis.

But Republicans, business leaders and fiscal watchdogs said the developing state budget, which has been negotiated entirely in secret, taxes and spends too much and doesn't do enough to cut or find "creative" ways to generate revenue.

"We could be looking at a budget with the largest tax increase in New York State history in the middle of a historic recession," said state Business Council president Kenneth Adams. "How is that supposed to create jobs and grow the economy?"

Mayor Bloomberg has been among the most vocal lashing out against raising taxes on the rich, saying it would drive job creators out of New York.

Bloomberg, whose aides have said the budget could shortchange the city on health care and school funding, should be happy that lawmakers reinstated $328 million in municipal aid Paterson sought to eliminate.

What angered Bloomberg was that the governor sought to eliminate the city portion while simply freezing such aid at the current year's levels for every other municipality.

"We have a large number of downstate members who would be put in a difficult position if we weren't able to secure a full restoration," said one Senate Democratic official. "It wouldn't have helped the icy relationship with City Hall."

Bloomberg has been a big backer of Senate Republicans, frequently saying he helps those who helps the city. Democrats hold just a slim majority in the Senate.

Meanwhile, drinkers of bottled water should expect to pony up more money. A controversial measure to include water in the 5-cent deposit recycle law is said to be in the final budget deal despite opposition from some Senate Democrats, the Senate official said.

The measure would allow the state to keep 80% of the unclaimed nickels and hike the handling fee bottlers pay retailers who collect the bottles to 3.5 cents, up from 2 cents.

Given the number of budget bills, 11, and Republican opposition to them, it's unlikely the entire budget will be debated and adopted by the Tuesday night deadline, giving the Democrats a loss in their first year controlling all of state government.

klovett@nydailynews.com

[jameznyhc]

Verizon Communications Inc. and its union are lining up to fight a proposal by Gov. David Paterson to increase a tax the company pays.

Verizon says the tax would go from $10 million a year to $65 million a year. The company said it would pay half of the fee on its own and the rest through a surcharge on customers' bills.
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Verizon spokesman John Bonomo said the company opposes the increase because it would apply only to traditional phone companies, not to cable companies - such as Cablevision Systems Corp. - that also provide phone services. That would give companies such as Cablevision a competitive advantage in attracting customers, he said.

About 17 percent of a Verizon bill now goes to taxes, fees and surcharges, Bonomo said.

"Our customers already have an onerous tax burden on their Verizon bills," he said. "And this would be another one."

The company and the Communications Workers of America are contacting legislators to let them know of their opposition, he said.

"We're knocking on the doors of legislators and state leaders and the union is right there with us" on the issue, he said.

Matt Anderson, a spokesman for the governor's budget office, said Paterson has proposed raising the fee to help cover a massive budget deficit.

The fee now goes to fund the Public Service Commission, the state agency that regulates utilities.

Under the governor's proposal, the tax would go from one-third of 1 percent of Verizon's intrastate revenues to 2 percent of those revenues, Anderson said. But it would drop back to 1 percent in March 2012, he said.

"This is one of many difficult choices that are required shared sacrifice from every New Yorker," Anderson said.

The proposal, like all of those the governor has made, is subject to negotiation with legislators, he said.

http://lohud.com/article/20090324/BUSINESS01/903240323

[metfan85]

You see how great states rights' is? Those 9 states are choosing to raise taxes, while 20 other states are choosing to lower taxes and to fight for state sovereignty, further reducing the burden on taxpayers. People can choose whether they want to live in a state like NY, or Washington, and pay half their salary to the various governments and regulations. Or in states such as New Hampshire or South Carolina and not give as much of their money and have to live and work by unrealistic regulations.

[jameznyhc]

lets not forget this new fed energy tax projected at $3-$4000 per household... tobacco just got clobbered again in fed taxes as well

[Gspot555]

You see how great states rights' is? Those 9 states are choosing to raise taxes, while 20 other states are choosing to lower taxes and to fight for state sovereignty, further reducing the burden on taxpayers. People can choose whether they want to live in a state like NY, or Washington, and pay half their salary to the various governments and regulations. Or in states such as New Hampshire or South Carolina and not give as much of their money and have to live and work by unrealistic regulations.

yes, that is true but you also have to factor in wages in cities like that, and i understand cost of living is less but you are right it all depends on your personal preferences and what you want out of life...i would probably kill myself if i lived in new hampshire or South Carolina,

but the taxes in NY are getting out of hand...and those cell phone taxes are a fucking disgrace

[Benny B]

yes, that is true but you also have to factor in wages in cities like that, and i understand cost of living is less but you are right it all depends on your personal preferences and what you want out of life...i would probably kill myself if i lived in new hampshire or South Carolina,

but the taxes in NY are getting out of hand...and those cell phone taxes are a fucking disgrace

you can say what you want about living in other states. i grew up in jersey. .lived in ny for a little while... ive lived in tn tx co. currently living in both colorado and texas.. and to say you would kill yourself if you lived in a place you never lived before is a very outlandish statement. everywhere you live it is exactly what you make of it.. if you go into it thinking you will hate it you will.. but if you go into it with your eyes open and make what you will of it you will find ways to enjoy what life has to offer.

and trust me.. i thought the same exact way you did before i moved to some of these places.. but the opportunities that are out there are overwhelming if you are willing to take a chance and experience something different.

[Gspot555]

you can say what you want about living in other states. i grew up in jersey. .lived in ny for a little while... ive lived in tn tx co. currently living in both colorado and texas.. and to say you would kill yourself if you lived in a place you never lived before is a very outlandish statement. everywhere you live it is exactly what you make of it.. if you go into it thinking you will hate it you will.. but if you go into it with your eyes open and make what you will of it you will find ways to enjoy what life has to offer.

and trust me.. i thought the same exact way you did before i moved to some of these places.. but the opportunities that are out there are overwhelming if you are willing to take a chance and experience something different.

you are right, but at this point in my life i couldnt imagine living there, that is what i should have said...

[Benny B]

ya know what i find most ironic about this is the fact that as all companies make cutbacks left and right.. the goverment cant cut back on anything.. instead the say.. give us more money.. if any one of you went in to a store and had to pay 5 bucks for what used to cost you 1.50 you wouldnt buy it anymore.. yet.. time and time again we elect idiots that do nothing but spend more and more of our money.. i just find it funny how little people say anything against the spending.. and increased taxes.. *great way to stimulate the economy" lol yet everyone is up in arms about people getting laid off at their jobs..

[Gspot555]

ya know what i find most ironic about this is the fact that as all companies make cutbacks left and right.. the goverment cant cut back on anything.. instead the say.. give us more money.. if any one of you went in to a store and had to pay 5 bucks for what used to cost you 1.50 you wouldnt buy it anymore.. yet.. time and time again we elect idiots that do nothing but spend more and more of our money.. i just find it funny how little people say anything against the spending.. and increased taxes.. *great way to stimulate the economy" lol yet everyone is up in arms about people getting laid off at their jobs..

i agree..the spending has and is continuing to be our biggest problem

[TrippinFace101]

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