Tax Revenue Snaps Back

The most recent recession has made a huge impact on all state and local governments, with many hard decisions having to be made. However, now some new decisions have to be made because of the current lack of federal funds that were available the past few years. Even still, state and local tax revenues have almost reached its peak from back in 2007. This can be attributed to the slowly healing economy as well as the tax increases during the recession. During this tough time, some fiscal policies were put into place in order to keep the economy afloat. A fiscal policy is defined as a government's program with respect to the purchase of goods and services and spending or transfer payments and the amount and type of taxes. For this article, the last part of this definition will be more prevalent. During the latest recession, the government implemented some tax increases that were to help the ailing economy. They did just this. In 2010 alone, the raising of taxes made for a boost in the state revenue of 12.3 billion dollars, or about 2%. Also helping with the state's struggles, state income tax revenue jumped 10.9%, and the sales tax showed an increase of 1.9%. These two increases, the income tax and the sales tax, have the more steady paychecks and stock-market gains to thank for their success. However, even with these positive increases, the states are not out of the storm just yet. Not only are local governments hurting because of the falling house prices affecting the property tax returns, but they are now la king the federal government support they received in the last few years. For the past two years, state governments have been relying on the nearly 150 billion dollars worth of federal stimulus to stay alive. This resource has not been depleted. Because of this, state authorities now have to consider cuts that would have happened two years ago had it not been for the federal support. So, even though things are beginning to improve slightly for the states, the cost of local and state government has risen faster then the overall inflation and thus causing difficulties for the states to get back on their feet. Having so much negativity attacked to the current economy, the good news remains this: state and local government's tax revenue has nearly snapped back to its peak reached several years ago. This is just one sign that the economy is beginning to revive itself and that states and localities are beginning to take steps towards sustainability. http://online.wsj.com/article/SB10001424052748703461504576231072013545188.html?mod=googlenews_wsj