• 150 days Could Crypto Overtake Traditional Investment?
  • 154 days Americans Still Quitting Jobs At Record Pace
  • 156 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 159 days Is The Dollar Too Strong?
  • 160 days Big Tech Disappoints Investors on Earnings Calls
  • 161 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 162 days China Is Quietly Trying To Distance Itself From Russia
  • 163 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 166 days Crypto Investors Won Big In 2021
  • 167 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 167 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 170 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 170 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 173 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 174 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 174 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 176 days Are NFTs About To Take Over Gaming?
  • 177 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 180 days What’s Causing Inflation In The United States?
  • 181 days Intel Joins Russian Exodus as Chip Shortage Digs In
Fake Reviews Go All The Way To The Top

Fake Reviews Go All The Way To The Top

Monitoring service Fakespot Inc found…

Biggest Job Gains in History, but It’s Not Enough

Biggest Job Gains in History, but It’s Not Enough

The U.S. economy added 467,000…

  1. Home
  2. News
  3. Breaking News

Wealthy Could End Up Footing The Bill For States’ Budget Shortfalls

Wealthy

As U.S. states brace for massive revenue shortfalls due to the pandemic, several are looking for ways to curb the budget deficits, including increasing taxes for the wealthy.

The majority of states are now holding their first full legislative sessions since the pandemic started and the very first issue to deal with is balancing the budget for this fiscal year and writing next year’s budget.

State revenue collections across the country plummeted as commerce slowed down to curb the spread of COVID-19. Even though some expected shortfalls as high as 20%, state revenues fell 1.6% in fiscal year 2020 and were 3.4% lower than projected before the pandemic 

According to some analysts, estimates are that state and local revenue losses will total about $300 billion through fiscal year 2022.

In full panic mode, some governors are proposing various budget-cutting and revenue-increasing measures, while they await federal aid.

The Biden Administration’s $1.9 trillion relief plan, the “American Rescue Plan”, would send hundreds of billions of dollars to state and local governments. The deadline for the final passage of the rescue plan is mid-March. 

According to an estimate from Moody’s Analytics, even with federal aid, states are still facing $56 billion in spending cuts or revenue increases to balance their budgets. 

In Arizona, authorities have already enacted a 3.5% surcharge on earnings above $250,000 for individuals and $500,000 for married couples filing jointly to raise revenue for public schools and other educational institutions. 

In Connecticut, authorities have proposed raising the income tax rate to 8.8% on individuals with a yearly income of over $500,000 and 12.6% on individuals that earn over $1 million a year. 

Connecticut’s proposal is modeled on New Jersey’s “millionaire’s tax”, which imposes a 10.75% tax rate on those earning more than $1 million per year.

In order to fill in a projected $1.28-billion gap in the next two-year budget, Minnesota governor Tim Walz has proposed a new state income tax bracket for couples earning $1,000,000 a year. Still, only 21,000 households would have an average tax increase of $8,072 per return under this proposal. Governor Walz has also proposed 4% tax hikes on capital gains and corporations. 

Pennsylvania Governor Tom Wolf proposed an income tax increase from 3.07%, to 4.49%. However, he said only the top one-third of earners would pay more.

Still, the proposed tax increases, if they get approved, will be enacted at different times in different states.

Opponents of the wealth taxes, particularly in New York, say the plan could backfire and drive away wealthy people who already contribute significant amounts to the state’s tax coffers. Other states with lower taxes could be the direct beneficiaries, with the move potentially leading to a change in demographics. 

By Fred Dunkley for Safehaven.com

Back to homepage

Leave a comment

Leave a comment