State Tax Revenues Plunge In Q2

Tyler Durden's picture

The latest confirmation that the US economy continues to deteriorate comes not from the Federal Government but from state-level data, where year-over-year growth in state tax revenues slowed in the first quarter to its lowest rate since the second quarter of 2014, according to the latest data published yesterday by the Rockefeller Institute of Government. Worse, preliminary data for the second quarter show an outright decline in state tax collections relative to the second quarter of last year.

As SMRA notes, state tax collections were up 1.6%, year-over-year, in the first quarter, the smallest increase since the second quarter of 2014. After adjustment for inflation, revenues were up 0.4%. Personal income tax collections, which account for roughly 36% of total state revenue, increased 1.8% in the first quarter, down from 5.1% in the fourth quarter. Sales tax collections - the second largest source of state revenue - increased 2.4% in the first quarter, up from 2.0% in the first quarter.

The trend deteriorated further in preliminary Q2 data with personal income tax tumbling nearly 5% Y/Y.

Corporate tax receipts, which account for less than 5% of state revenues, were down sharply for the second consecutive quarter, while motor fuel taxes, which also account for just under 5% of revenues, were up 2.0%, down from 3.5% increase in the fourth quarter.

According to preliminary estimates from Rockefeller, tax collections will be down 2.1% in the second quarter relative to last year, reflecting a decline of 3.3% in personal income taxes and a 9.2% plunge in corporate tax collections.

Sales tax revenue is estimated to have increased.

Rockefeller attributes the recent softness in personal income tax collections to a variety of factors, including weakness in the stock market, in both 2015 and the earlier part of this year, which has depressed tax collections related to investment income. Tax collections have been particularly weak in states with economies that are heavily reliant on oil or other natural resources. In the second quarter, growth in individual income taxes from withholding has slowed considerably.

The suddenly plunge in state income tax should not come as a surprise: the trend in individual income taxes at the state level in recent quarters tracks the sharp decline we have reported previously at the federal level.

For most states, the second quarter marks the end of the fiscal year and the current fiscal year began on July 1. According to Rockefeller, most states forecast weak income and sales tax growth for fiscal 2017. Also, in many states 2017 budget projections were prepared before the second quarter and don't yet reflect the downside surprise in April tax receipts. In the words of the analysts at the Rockefeller Institute the outlook for state budgets in the 2016-2017 fiscal year "remains gloomy."

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BeerMe's picture

We've certainly collected less sales tax.  The end of Q3 is the worst I've seen in some years.  2016 is shaping up to be closer to 2008-2009 levels.

Silverhog's picture

MA sales tax collections for me were down 90% for August. Open 34 years, all time low. 

JMT's picture

what part of the state are you in .. Eastern MA is booming. Central MA (West of I 495 & Western MA west of I 91)and western MA feel like a time warp back 30 years.   Depressing , kids tweaked out on meth & heroine.. 

oops's picture
oops (not verified) JMT Sep 24, 2016 9:20 PM

What George Washington said and no one paid attention. http://wp.me/p4OZ4v-3z

venturen's picture

the money men took all the money! Flyover country moves closer and closer to the water's edge!

King Tut's picture
King Tut (not verified) BeerMe Sep 24, 2016 8:28 PM

Buy tax-free from AMZN-  starve the beast

Stu Elsample's picture

make welfare recipients pay a 100% tax on their crack pipes and accessories

Falling Down's picture

Chore Boy, too? Dats rayciss!

The Duke of New York A No.1's picture

Raise those rates in December Grandma!.

messystateofaffairs's picture

Nothing to worry about, probably just the Laffer Curve.

Harry Paranockus's picture

How can this be happening when median icomes rose 5.7%? Aren't these people out spending all their additional largese?

Cash Is King's picture

Incomthesable! How is this possible with UE at 5%?

Bwana's picture

It looks like Obamanomics is working just like he planned.

Oldwood's picture

Why are we still pretending these numbers mean anything in a completely distorted and corrupt economy? Do we really need numbers (as conjured as they are) to convince us of the state of things? 

We know it isn't sustainable, so timing some imminent collapse is just another gamblers game. Betting on our own death? Will it be profitable to commit suicide to fix the odds?

JailBanksters's picture

Not a problem at all

The United States can pay any debt it has because we can always print money to do that.

: A Greenspan


mkkby's picture

Most likely not correctly counting nigger care as a tax.  It should be WAY UP, which is why everything else is down.

bornlastnight's picture

As long as jobs are shipped overseas and Americans don't have jobs to pay taxes, this will continue. 

fattail's picture

It would help if the labor supply was not being deliberatly expanded to suppress wages.   But what can you do, the immigration policy for the last 40 years was designed to benefit the corporations and banks that own this country.

silverer's picture

I'm wondering who's going to rush to confiscate saver's bank accounts first. The banks, to remain solvent, or the state for their pension funds to remain solvent?

dogbert8's picture

States will have to find something else to tax; watch what they're doing in Illinois and Chicago as examples -- they tax anything that isn't either nailed down or already taxed.

King Tut's picture
King Tut (not verified) dogbert8 Sep 24, 2016 8:31 PM

For some reason I am still not paying sales tax here in IL on a lot of AMZN orders

Whatta's picture

Wait what?

AssKlown Obama was just spiking the ball on household income being up. He wouldn't lie to us would he?

http://www.nasdaq.com/article/2015-household-income-up-52-is-just-spin-c...

hardmedicine's picture

I"m so so tired.  Just very very tired.

PersonalResponsibility's picture

After a few weeks, again I went to bed 1 hour earlier than usual. It made all the difference.

all-priced-in's picture

Factor in to this drop in sales tax collections -

 

That sales tax rates never go down - they only go up - so for the amount collected to actually drop sales had to get creamed.

 

Its a sales tax creampie.

 

 

AGuy's picture

"That sales tax rates never go down - they only go up - so for the amount collected to actually drop sales had to get creamed."

Sales tax can go down, but the adjust the reduction by increasing income tax or slapping on other taxes (gas tax, sin tax, property taxes, etc). Overall the total tax liability for residents & business always increase. However, I think the rate increases and the frequency of rate increases will be must higher going forward as the state pension bomb explodes. As the pensions costs rise, the will need to continuous raise taxes to cover the outlay deficits.

 

Hal n back's picture

Anybody saying the economy is growing is peddling fiction.

 

There, someone had to say it.

Dig Deeper1's picture

No big deal here.  Remember sales taxes are not due when you lease a new car only when you "buy" one.