States' Revenue Report

[don]

From the Nelson Rockefeller Institute of Government Report on April State Income Taxes:

Total personal income tax collections in January-April 2009 were 26 percent ($28.8 billion) below the level of a year ago. In April 2009 personal income tax receipts fell by 36.5 percent, or $18.2 billion.

Try reconciling these percentages with the official unemployment numbers. What percentage of these personal returns have tax deductible losses would be illuminating. A minority I would guess.

The Lucky 'Winners' are:

Oregon 27.0%
Massachusetts 28.5%
New York 31.8%
California 33.8%
Connecticut 25.9%
Colorado 25.4%

The full report is @ http://online.wsj.com/public/resources/documents/2009-06-18-State_Revenue_Flash.pdf

[babbittd]

The legislature is about to raise the sales tax from 5% to 6.25% here in Massachusetts. How long will it before state troopers are assigned to stop cars coming from New Hampshire and search for common consumer goods purchased tax free, the way they do with fireworks buyers?

[lurker]

"Both estimated payments and

income tax returns dropped by
over 30 percent in January-April
of 2009, while withholding
dropped by 6.9 percent."


Just to be contrarian I wonder if not all of the drop is due to unemployment, but a large part could be due to folks reducing their withholding and not paying their estimated taxes figuring that they might need cash on hand if they get laid off later in the year,

If the later in the year layoff does not materialize the states may end up collecting this revenue in April '10.

If I were living nearly month to month I'd certainly stop pre-paying my taxes. Better to risk a (small) penalty in the case where you remain employed, than to risk being without cash if you get laid off.

[lurker]

Total sales at the company I work for are off about 20-25% vs this time last year, somewhat in line with States' income tax falls.

I wonder if there is a widespread 25% decline in economic activity since Q1 08 across the whole economy ? If so that's one hell of a contraction.

[zoog]

From the Nelson Rockefeller Institute of Government Report on April State Income Taxes:

Total personal income tax collections in January-April 2009 were 26 percent ($28.8 billion) below the level of a year ago. In April 2009 personal income tax receipts fell by 36.5 percent, or $18.2 billion.

Try reconciling these percentages with the official unemployment numbers. What percentage of these personal returns have tax deductible losses would be illuminating. A minority I would guess.

The Lucky 'Winners' are:

Oregon 27.0%
Massachusetts 28.5%
New York 31.8%
California 33.8%
Connecticut 25.9%
Colorado 25.4%

The full report is @ http://online.wsj.com/public/resources/documents/2009-06-18-State_Revenue_Flash.pdf

Calculated Risk has a chart of "the change in personal income taxes multiplied by the percent personal income tax of total state taxes in 2008."

link (http://www.calculatedriskblog.com/2009/06/more-on-state-income-taxes.html)

Oregon appears to be the worst on that chart (with New York close behind). It's worth noting that we have no sales tax in Oregon.

[charliebrown]

well lets see here is the tax situation in Ill.
- 10% unemployment 2008 vs 5% 2007 -> 5% less income tax.
- Underemployment, 100K a year mortgage broker now making 20K at Home Depot.
- Interest income 5% short term interest in 2007, 1 % in 2008.
- Capital gains 0 % for most people in 2008. Probably even capital losses.
- Property taxes Up they are deductible at the state level.
- Out of pocket medical, education expenses Up; they are deductable in Il.
- Sales tax rates up in ill. purchases probably down more
- All the other fees for professional liceneses, car plates, etc probably down due to lower economic activity.
- Corprorate taxes will probably be zero except for a handfull of recesion proof companies.

Does that cover most of the major items?

[ASH]

Calculated Risk has a chart of "the change in personal income taxes multiplied by the percent personal income tax of total state taxes in 2008."

link (http://www.calculatedriskblog.com/2009/06/more-on-state-income-taxes.html)

Oregon appears to be the worst on that chart (with New York close behind). It's worth noting that we have no sales tax in Oregon.

We're number 1! We're number 1!

[Sharky]

Does that cover most of the major items?

Good list. I would add:

-- Health insurance costs up
-- Overtime hours down or eliminated entirely
-- Company dividends cut
-- Income from stock options down or gone
-- Income from bonuses down or gone (unless you work for a bank)
-- Commission income from sales-oriented positions down

On the flip side (for the gov), if you default on credit card debt, doesn't that get counted as income?

[metalman]

On the flip side (for the gov), if you default on credit card debt, doesn't that get counted as income?

that's right. paying off your credit card = saving.

what a racket.

[drumminj]

I think Sharky was referring to getting 1099'ed for the forgiven debt, and thus owing taxes on it

[Sharky]

I think Sharky was referring to getting 1099'ed for the forgiven debt, and thus owing taxes on it

Yes, exactly.

[don]

Good list. I would add:

-- Health insurance costs up
-- Overtime hours down or eliminated entirely
-- Company dividends cut
-- Income from stock options down or gone
-- Income from bonuses down or gone (unless you work for a bank)
-- Commission income from sales-oriented positions down

On the flip side (for the gov), if you default on credit card debt, doesn't that get counted as income?


I have a friend, a city worker in a 100,000 pop burg, that works in the parks and maintenance department. Their work arc to date has cut thusly:

Hiring Freeze- 100 person staff, through attrition, now down to 70.

Mandatory 2-day a week overtime. Bigger checks, inevitable fatigue.

Next budget crisis. Absolutely NO overtime. Maintenance schedule is stretched out to accommodate.

Next budget squeeze. One day every two weeks furlough (10% pay cut) Downtown commercial areas no longer maintained, etc.

Every step of the way: no city management pay cuts and continual attempts to privatize city services.

I assume this is typical across the country.

[coolhand]

I believe this report is just states' personal income tax receipts. I am not sure it includes corporate taxes. But there is a lot more leverage in corporate tax receipts, both up & down. For example, 6 quarters ago, Fedex (at least a Fortune 50 company & maybe Fortune 20 company) paid ~$300mm in a single quarter in income taxes per their quarterly results.

Last quarter, they paid $2mm.

"As reported" S&P 500 earnings are probably a reasonable proxy for corporate earnings, given the #'s they give to the IRS probably usually lower than the #'s they give Wall Street for obvious reasons. If so, recall that "as reported" S&P 500 EPS were a negative # for the 1st time EVER in 4Q08, & let's face it, haven't gotten a lot better since, with maybe the exception of banks.