States tax collections saw robust growth in the first half of 2013 but significant softening in the second half. Preliminary figures for the first quarter of 2014 indicate even slower growth of tax revenues, according to the latest State Revenue Report from the Rockefeller Institute of Government. State tax revenues grew by 5.7% and 3.5%, respectively, in the third and fourth quarters of 2013, compared to the same quarters in 2012, after growing by more than 9% in the first half of 2013. Personal income tax collections grew more slowly, showing only 5% and 0.4% growth in the third and fourth quarters of 2013. These growth rates are much slower than the 18% and higher growth increases in both the first and the second quarters of 2013. The slowdown is likely due to the mirror-image effect of the initial fiscal cliff on taxpayer behavior, which had driven tax collections upward a year ago. If Congress had not taken any actions to address the "fiscal cliff" at the end of 2012, tax rates would have risen on several types of income, including capital gains.
Tax Revenue Collections Grew More Slowly in Second Half of 2013
Wednesday, June 11, 2014