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Since this new federal tax bill is planning on eliminating
state and local tax deductions from federal income, it will put
pressure on state govts. to find new forms of revenue without
raising income taxes. Before the year is out, I predict several
states will legalize recreational pot. I am sure that is just
what the GOP wants.
State governments are already looking for alternative sources of
revenue. General funds are based on income tax, sales tax, and property
tax. These funds are declining. To replace them, states are relying
upon the loosely defined "other state funds" now accounting for about
40% of state revenue. These are funds that are locked into supporting
specific government functions. Here is a description of "other funds'
“Expenditures from revenue sources that are restricted by law for
particular governmental functions or activities. For example, a gasoline
tax dedicated to a highway trust fund would appear in the “Other State
Funds” column. For higher education, other state funds can include
tuition and fees. For Medicaid, other state funds include provider
taxes, fees, donations, assessments, and local funds."
This category of income is increasing as conservatives need to find ways
to fill the shortfall of their promised tax reductions. Bottom line is
that we pay one way or the other.