The State of the State Future

Illinois has just announced a whopping 66 percent increase in state personal income tax to try to bring down its huge budget deficit. This was a long time coming. I don’t know if this trend will continue since most of the states are being controlled by Republican governors and even if they are not, no state wants to increase taxes to kill whatever jobs there are or whoever is contemplating to move in. but this will be the shape of things to come in future since the jobs are not there and state and federal regulations reduce the incentive to invest. We will see if this tax increase will be a job killer or people will realize that it has to be done.

See this recession has finally expose the shaky financials of all states. They got used to years of growth and kept on promising state employees big increases without putting enough funds for a rainy day (and by enough I mean at least a year worth of spending), while at the same time, cutting taxes to the bare bones and now its is payback time and the federal stimulus money is going to dry up this year and then the states will really hit the wall with the expenses. So the states and its inhabitants should be prepared to face the deficit music.