Possible Insight

Ratcheting State and Local Taxes

with 2 comments

Yesterday, Mark Perry at Carpe Diem looked at state and local tax revenues.  Then Don Boudreaux at Cafe Hayek observed they should be adjusted for inflation.  Given my previous analysis (here, here, and here), I thought I’d chime in and adjust them for population*:

Over the entire period, real per-capita revenues rose 22%.  On the graph, you can clearly see the 2001-2002 and 2008-2009 recessions. If we go peak to peak in the last business cycle, 2001 to 2007, the growth was 13%.  If we go trough to trough, 2002-2009, the growth was 9%.

Notice that even from the peak of the previous business cycle in 2001 to the trough of the current business cycle in 2009, real per-capita revenues were still up 6%.  So the recession is clearly not the proximal cause of the state and local budget problems.

State and local government agencies have more inflation-adjusted dollars per person today than they did at the peak of the boom in 2000.

Their revenues are consistently growing. The problem is that they can’t get their damned spending under control!

* State and local government tax revenue from this Census Bureau data.  2000-2009 population estimates from here.  1990-1999 from here.  Ironically, 2010 population data is not yet available so I couldn’t generate a per-capita datapoint for 2010.  I used the CPI-U series for inflation.  I did all the analysis in this spreadsheet file.

Advertisements

Written by Kevin

March 30, 2011 at 11:31 am

Posted in Economics, Government

2 Responses

Subscribe to comments with RSS.

  1. I enjoy your insights, its good stuff. Thanks.

    Mike

    March 31, 2011 at 12:19 pm

  2. GDP might be a more interesting deflator to use than CPI. 

    Todd White

    June 28, 2011 at 4:27 pm


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: