Tax Revenue Down in at least 44 States

By: - November 23, 2009 12:00 am

Tax collections declined in the third quarter in the 44 states for which early data are available, according to a report released today (Nov. 23) by the Nelson A. Rockefeller Institute of Government.

States collected 10.7 percent less in tax revenue in the July-September period than during the same three months a year ago, according to the report , which predicted that tax collections in the final three months of the year “will continue to be weak.”

Even North Dakota – the only state to post growth in tax collections in recent quarters – saw a 17.3-percent decline in the third quarter, according to the study, which attributed the change to reductions in the state’s personal and corporate income tax rates.

All three major sources of states’ tax revenue – sales, personal income and corporate income taxes – shrank in the third quarter. Corporate income taxes were most volatile, dropping 19.4 percent, followed by the personal income (11.4-percent drop) and sales taxes (8.2-percent drop).

Corporate income tax collections declined more in Ohio than in any other state in the quarter, falling more than 111 percent, though the report did not explain that precipitous drop. Alabama posted the worst personal income tax collections, dropping 26.7 percent, while Utah saw the worst sales tax collections, falling 23 percent. Massachusetts was the only state to post growth in sales tax collections, but Rockefeller attributed that to a 1.25-percent increase in the state’s sales tax rate.

For more on the Rockefeller report, read The Wall Street Journal ‘s coverage here .

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