Deep blue states like California and New York are starting to see their tax revenues drop while the exact opposite is happening in many red states.
It was quite predictable, especially in California, which is losing businesses almost every week due to rising crime.
California and New York have also lost population in recent years for a number of reasons, including crime, high taxes and strict COVID-related rules.
It was only a matter of time.
Washington’s Free Beacon reports:
Democratic strongholds see their tax revenues plummet
Last year, highly taxed blue states such as New York and California saw some of the most drastic tax revenue declines in the country. At the same time, Republican states enjoy the highest revenue increases, even as they keep income taxes low.
Under Democratic Gov. Gavin Newsom, California has turned a $100 billion budget surplus into a $32 billion deficit, Bloomberg reported Friday, forcing the state to scale back its “noble climate change agenda, delay financing and increase internal borrowing. In this year alone, the former golden state has seen its tax revenue crater nearly 25% as it haemorrhages wealthy residents to less taxed states.
New York, which under Democratic Governor Kathy Hochul has the highest tax burden in the country, saw a similar drop in revenue of almost 20%. California and New York last year saw their populations decline by about 294,000, Bloomberg reported.
California and New York aren’t the only blue states with tax problems. Illinois, New Jersey and Hawaii also reported declines, according to Bloomberg, although theirs weren’t as drastic.
Illinois is another good example, where life is about to get more expensive.
From NBC News in Chicago:
Groceries and gas in Illinois will become more expensive on July 1
Illinois grocery tax
Illinois’ 1% grocery tax was suspended last year as part of a $46.5 billion 2022 budget plan aimed at providing relief to families struggling with rising grocery costs. commodities and inflation. Officials said the extension is expected to save taxpayers up to $400 million in the fiscal year.
The tax was suspended for 12 months on items which included “food for human consumption which must be consumed off the premises where it is sold”. Alcoholic beverages, soft drinks, candies, and foods prepared for immediate consumption were not included in the grocery tax suspension…
Illinois Gasoline Tax
Also as part of the state’s fiscal year 2023 budget, a mandatory inflation-linked gas tax increase was delayed six months last year.
The increase, which took effect Jan. 1, saw the tax rise to 8.2%, meaning the rate for Illinois motorists increased by about 3.2 cents per gallon earlier this year, bringing the state’s total unleaded gasoline tax to 42.4 cents per gallon. .
Less tax revenue means that the leaders of these states are going to start having to cut some services or raise taxes even more. It’s a vicious circle and it leads nowhere.