Commentary

States Go Tax Crazy

Has your wallet been feeling lighter over the last decade? If so, you’re definitely not alone:

If it seems like your taxes have been going up, they probably have ââ?¬â?? at least at the state level. State taxpayer burdens increased by an average of 41 percent from 1994 to 2004, according to newly released data from the Census Bureau. Only one state, Alaska, saw the amount it collects per person decline. Even when the numbers are adjusted for inflation, the individual tax burdens increase in 43 states. Hawaiians last year paid the most to state government ââ?¬â?? $3,050 per person on average. Texans paid the least ââ?¬â?? an average of $1,368. Rising education and Medicaid costs have fueled spending growth, which has led to higher taxes, analysts said. . . . . Many states raised taxes early in the decade because of budget shortfalls caused by the economic slowdown. Many of those states now have budget surpluses, leading some, including Hawaii, to debate tax cuts. “Many states are having an unexpected surplus of revenue, and that is because of economic growth,” said Stephen Slivinski, director of budget studies at the Cato Institute. “It’s mainly because their estimates on economic growth were very low.”

Leonard Gilroy is Senior Managing Director of the Pension Integrity Project at Reason Foundation, a nonprofit think tank advancing free minds and free markets. The Pension Integrity Project assists policymakers and other stakeholders in designing, analyzing and implementing public sector pension reforms.