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States Turning to Tax Increases to Battle Revenue Drain

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Who cares about economic growth when you can just raise taxes? A report released to day by the Nelson A. Rockefeller Institute of Government indicates states were able to reverse the slump in tax revenues through the first half of the year. Preliminary tax collection data for the second quarter shows overall state tax collections grew for the second consecutive quarter, but remain well below pre-recession levels.

Personal income taxes comprise 41 percent of total tax revenue reported in the second quarter. Personal income tax revenues increased by 1.6 percent for the nation compared to the same quarter of 2009, but were down by 27.3 percent compared to the same quarter of 2008, the report noted.

Meanwhile, employment declined in 41 of the 47 states reporting early data, according to the report.

Of course, while the increase in tax revenues certainly helps cash-strapped states, a significant number of states raised tax rates, accounting for at least some of the boost in revenues. Who cares about economic growth when you can just raise taxes?
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