In the struggling economy more and more attention is being given to budget deficits. The amount of debt is staggering and according to recent reports it does not appear to be getting any better. Many states have suffered declines in revenue not seen since the last World War. A record number of states had to combat deficits by cutting costs wherever they could and raising taxes to boost their revenue. A frightening statistic reveals that between 2009 and 2011 a mere eight states implemented tax cuts. 24/7 Wall St. investigated six states that reported a significant increase in revenue. They found that cutting expenditures rather than bringing in higher revenues was more important to try to combat the deficit.
While the media focused on the increase in revenue from taxes, an expert, Tracy Gordon, revealed that the figures actually showed an increase less than those during recessions in previous decades. However, it is possible that the government may misinterpret those figures and decide to increase 2012 taxes yet again. Many government services had to be cut and this was true even in the states which reported high revenue. Unfortunately those cuts affect education, public health, the elderly and the disabled. It appears that simply cutting costs and raising taxes is not a solution to the economic crises, but with a lack of options it seems unlikely that we will see tax cuts in the coming year. Instead 2012 taxes will likely be raised and government services will suffer more cuts.
- Payroll Tax Cut Can Hurt Social Security (2012tax.org)
- Reducing Budget Deficit By Increasing Taxes (2011tax.org)