This report from the Center on Budget and Policy Priorities, Better-Than-Expected State Tax Collections Highlight Importance of Income Taxes, has some great information supporting TFT's work to implement a personal income tax in Tennessee.
Some highlights:
At least 28 states have reported that tax collections for the just-ended fiscal year will exceed the amount expected when their budgets were adopted last spring. In 23 of those states, the improvement is driven by gains in income tax collections—a result of rapid increases in the incomes of wealthy individuals and corporations over the last year. (Aside from North Carolina, the exceptions don’t have a personal or corporate income tax or both.)
On average, in the 28 states with higher-than-expected growth, personal income taxes have grown 9 percent over last year. That jump is more than double the 4.4 percent growth rate that was anticipated when these states’ budgets were enacted. Sales tax growth is only about 1.5 percentage points above the 2.9 percent originally projected.
Increases in corporate profits and rising incomes for individuals and families—especially the wealthy—have fueled the boost in revenues. Personal and corporate income taxes are significantly higher than expected, while sales taxes generally are much closer to targets. These gains in personal or corporate income tax collections led to higher-than-expected revenues than had been forecast when the budgets in at least 23 states were adopted last year.
The Great Recession appears to be following the pattern of recent recessions where the incomes of the wealthy recover well before those of low- and middle-income individuals and families. For example, during the economic expansion that followed the 2001 recession, the average inflation-adjusted income of the bottom 90 percent of households grew just 4 percent while the incomes of the top 1 percent grew more than ten times faster (by 62 percent). Many experts expect a similar pattern now.
To read the full report, go here
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