Are State Coffers in Jeopardy from Fed Tax Cut?

With the National Conference of State Legislatures saying 23 states already feel the pinch of a slowing economy and large state tax cuts made during the late 1990s, at least one group says the situation will only worsen with the pending federal tax cut. Basing its analysis of the President's original tax cut proposal, Citizens for Tax Justice estimates states stand to lose potentially $35 billion dollars a year in revenues by 2012.



As much as $15.2 billion would be lost through the repeal of the federal estate tax. Currently, according to the group, each state gets almost 26 cents of each dollar the federal government receives from estate taxes paid by residents of that state. The revenue sharing accounts for 1-3 percent of states' total tax revenues.



The group points out as well that, according to the congressional Joint Committee on Taxation, another effect of the estate tax repeal is an additional $16 billion in lost state income tax revenues annually by 2012.



The May report from Citizens for Tax Justice provides a table presenting the estimated losses for each state. The full report is available at: http://www.ctj.org/html/statefx.htm