State governments are now facing the same problems American families have been dealing with over the past year…more bills than revenue. So to pay their bills, state governments often raise taxes because, unlike the federal government, states cannot deficit spend (h/t: Marc Ambinder).
This creates a vicious cycle, applying even more financial burden on families already struggling to put food on the table. Higher taxes help supress the business environment, which means even fewer jobs. Fewer jobs mean a continuation of a depressed housing market, etc, etc, etc. You get the idea, it’s a lose-lose situation.
As Ambinder points out, just as many “blue” states as “red” are facing steep declines (the handy chart below from WSJ is an easy reference):
However, all but one of the states currently considering tax increases are “blue” states – those voting for Obama in the 2008:
Arizona
Connecticut
Delaware
Illinois
Massachusetts
Minnesota
New Jersey
Oregon
Washington
Wisconsin
Vicious Cycle: Slow Economy = Low Tax Revenues = New Taxes
Posted by Tyler Harber on Monday, April 13th, 2009 at 7:02 AM
State governments are now facing the same problems American families have been dealing with over the past year…more bills than revenue. So to pay their bills, state governments often raise taxes because, unlike the federal government, states cannot deficit spend (h/t: Marc Ambinder).
This creates a vicious cycle, applying even more financial burden on families already struggling to put food on the table. Higher taxes help supress the business environment, which means even fewer jobs. Fewer jobs mean a continuation of a depressed housing market, etc, etc, etc. You get the idea, it’s a lose-lose situation.
As Ambinder points out, just as many “blue” states as “red” are facing steep declines (the handy chart below from WSJ is an easy reference):
However, all but one of the states currently considering tax increases are “blue” states – those voting for Obama in the 2008:
Arizona
Connecticut
Delaware
Illinois
Massachusetts
Minnesota
New Jersey
Oregon
Washington
Wisconsin