Taxed $25 billion more, but it’s not enough

Thursday, September 30th, 2010

By Frank Keegan – Taxpayers gave up almost $25 billion more to state and municipal governments in the year ending June 30 than they did for the same period only three years ago. And the total taken is more than $143 billion — 49 percent — greater than if governments had limited tax increases to the inflation rate since 2000.

No matter how much they tax us, it will never be enough.
They’ve already secretly locked in future spending increases that guarantee citizens must endure higher taxes for reduced services, public workers must work harder with less for less and municipal bondholders face default.   
Latest U.S. Census data on state and local tax revenue plus projections by states prove one thing: They always will take more than the economy grows and spend more than they take.
Second quarter tax revenues are up 1.7 percent over the same quarter in 2009. For the 12 months ending June 30, they are flat to the same period in ’09 and ’08, and actually $25 billion higher than 2007, when there was no fiscal crisis.
That’s a total tax increase of almost 2 percent when household income dropped more than 3 percent.
Obviously, politicians didn’t get more out of taxpayers by fostering economic growth. They just ruthlessly squeezed more out of citizens already suffering from an economic sucker punch.
 According to The National Conference of State Legislatures' latest projections, “The [state] revenue slide associated with the recession was tempered by state tax increases. Half the states raised taxes in 2009 for a net increase of $28.6 billion (3.7 percent of prior year collections). The net increase in 2010 was substantially more modest at $3 billion (0.4 percent). Together, these increases helped bolster the revenue growth projections in many states.”
And none of this includes hidden unpaid expenses for retirement benefits, deferred projects, shirked insurance premiums, catastrophic investments and federal debts owed on Medicaid and unemployment funds.
Hidden spending could be as high as $10 trillion, a tab state and local leaders are leaving for citizens to pay.
Do not let them blame the recession. Before it hit, as of 2007, state and local governments had a $9.9 trillion hole to fill, according to the Government Accountability Office.
GAO-10-899 reported last month that “closing the fiscal gap over the next 50 years would require action to be taken today and maintained for each and every year going forward equivalent to a 12.3 percent reduction in state and local government current expenditures.
Any city waiting for a state bailout or state hoping for federal salvation should note, “… the challenges cannot be adequately met by shifting burdens from one level of government to another.”
That’s not an opinion or recommendation; it is a simple statement of accounting reality. Since 2007 reality has gotten a lot worse.
Yet NCSL admits tax hikes and economic recovery will not be enough to feed their reckless spending. “Lawmakers expect to have closed multi-year budget gaps exceeding $530 billion by the time the effects of the recession dissipate. And despite recent revenue improvements, more gaps loom as states confront the phase out of federal stimulus funds, expiring tax increases and growing spending pressures. …
  
“Revenue performance is a key component of state fiscal health, so improvement in tax collections is very good news. But in the near term that will not be enough to propel states out of their fiscal difficulties. At a minimum, officials are struggling to address the phase out of federal stimulus funds. Many also are dealing with the expiration of temporary tax increases or the depletion of one-time revenue sources. There are also mounting budget pressures from rising caseloads and deferred spending.”
 
Nowhere in the legislatures’ report is any indication of the slightest concern for struggling taxpayers pushed into the financial abyss by taxes; no mention of the fact that every dollar politicians take from citizens and businesses is a dollar that cannot be spent or invested in the very economic recovery that is our only hope.
 
They do not even think about those they are sworn to serve, citizens who pay all the bills.
 
The only thing these latest reports on post-recession tax revenues proves is that no matter how much they tax us, it will never be enough.   
 
Frank Keegan is a national editor for The Franklin Center for Government and Public Integrity, watchdog.org and statehousenewsonline.com . frank.keegan@franklincenterhq.org

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3 Responses to “Taxed $25 billion more, but it’s not enough”

  1. […] one thing, state and municipal officials claiming revenue crisis fail to mention they squeezed $25 billion more out of taxpayers in the first six months of this year than they did in the same period only three […]

  2. […] For one thing, state and municipal officials claiming revenue crisis fail to mention they squeezed $25 billion more out of taxpayers in the first six months of this year than they did in the same period only three […]

  3. […] For one thing, state and municipal officials claiming revenue crisis fail to mention they squeezed $25 billion more out of taxpayers in the first six months of this year than they did in the same period only three […]

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