Study: 41 States Collected More Tax Revenue Last Year Than They Did Prerecession

By:
Chris Gaetano
Published Date:
May 6, 2019
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Even when taking inflation into account, a record-breaking 41 states collected more tax revenue last year than they did prior to the 2008 recession, according to Governing magazine, based on an analysis of state revenues by the Pew Charitable Trusts. The spike was attributed to three main causes. 

One was the passage of the federal Tax Cuts and Jobs Act. As the new measures were set to go into effect the following year, many taxpayers decided to pay their taxes in late 2017 versus early 2018. Another factor was state-level policy, as many governments, such as Connecticut, increased taxes that year to boost revenue; the ones that did not, such as New Jersey, were not among the 41 with surging revenues. Finally, stock market growth, as well as general business growth, has led to more tax collection for state governments. 

It is uncertain whether this boost will persist into this year. Governing said that preliminary data for the current tax year indicates that 19 states have already reported income tax revenues lower than expected. It also said that while many states have seen increased revenue, governments still overestimated just how much growth there would be. Further, risk factors such as a global economic slowdown, volatility in stock markets, rising interest rates and economic risks associated with trade disputes could impact state revenues going into 2019. 

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