Porkulus Bill Bad For State Revenue, Too!
So, Porkulus is good for increasing the power and scope of the federal government, and….well, that is pretty much it. Flip it, you get massive generational debt, rampant out of control pork spending, deflate the dollar (though, Timmay Geithner can do that pretty easily just by opening his mouth,) increasing the power and scope of the federal government, and, hosing the revenue of the States
President Barack Obama told the nation’s governors in February that the states’ $229 billion share of the federal stimulus package “will ensure that you don’t need to make cuts to essential services that Americans rely on now more than ever.”
But while one hand of the federal government is offering Medicaid, education and other direct assistance to the states, the other hand could reduce state tax revenues by billions of dollars. That’s because many states copy adjustments in the federal tax code into their own to make things less confusing for taxpayers – and the $787 billion stimulus package is heavily laden with federal tax breaks and incentives.
The changes could dwindle revenues at a time when states are facing their own fiscal crises.
“We have to balance our budget and the federal government doesn’t,” said Sen. David Hoyle, a co-chairman of the North Carolina Senate’s Finance Committee. “So they can spend at length what they want and print more money. We can’t.”
Rather then breaking it all down, I would highly recommend clicking on the link for the full details, of which there are quite a few. Estimates have the states losing, or, in reality, not raising, $4 to $60 billion in tax revenue over the next two years. That might not mean much to a federal government that seems to pull money out of unicorn ridden by a naked Obama’s butt (take that however you read it,) but States have to have balanced budgets, and things will not go well with the elected officials if they start raising taxes. But, some states have a different idea
To avoid losing millions in revenue, states that automatically adopt federal tax changes will have to override those rules. Oregon’s legislature has already done that, saving the state $135 million.
In other words, all those so-called tax breaks the Porkulus package provides, the States will rescind.
Shell game. And it doesn’t help that the Financial Times thinks that the Obama bank rescue plan will rob taxpayers.
Hey, more unicorns (one with a strategic edit)