Tax reform benefit: These states are seeing a revenue boost
Conservative Move Real Estate Network's Paul Chabot on the mounting exodus from high-tax states such as New York and California.
Multiple U.S. states are experiencing a big jump in revenue, which has boosted their outlook, thanks to an expanding economy and job growth with more people working and pulling in bigger paychecks.
Tax reform is also being identified as a reason behind the states’ bettered financial position.
“Unlike last year, we’re seeing broad-based strength,” Matthew Knittel, who directs Pennsylvania’s Independent Fiscal Office, told The Wall Street Journal. “Taxes on income and sales are both coming in higher than expected, reflecting factors like rising employment and wages,” he added.
In 2017, Pennsylvania lawmakers faced a lengthy showdown over a $2.3 billion budget gap. Knittel said the current shortfall is “much smaller.”
Pennsylvania isn’t alone is seeing a boost in revenue. Minnesota and Utah have also experienced stronger-than-expected revenue – enough for a budget surplus. Minnesota is on track for a $329 million surplus and Utah could have an additional $500 million, as reported by The Wall Street Journal.
“Good job growth, good wage growth” drove the state’s favorable tax-revenue figures, said Phil Dean, Utah’s budget director. Minnesota budget officials expect the state’s income and job growth will continue through 2019, further padding tax revenues.
Connecticut, a state which despite its high tax states has been facing a financial crisis for years, will likely experience a big revenue boost, too. In late April, the state projected a $1.34 billion increase in excess income tax revenue. However, this big swing may not be sustainable. Ben Barnes, the state’s budget chief, said about half of revenue is coming from one-time payments from hedge fund managers trying to beat a tax deadline on past offshore earnings. Also, some of the excess could be coming from residents trying to beat the tax deadline for capital gains.