A California Republican

Everyone pays taxes. However, how much you pay can often be dependent on where you live.

All the states (except for Vermont) are required to balance their budgets. When shortfalls occur, this leaves states with the option of cutting services, raising taxes or doing some combination of both. Some states don’t have income tax, but have higher property taxes. Other states don’t have income tax but have high tourist taxes (gambling, rental cars and hotel rooms are all things that can be considered “tourist” taxes). While othes have income tax, sales tax and property taxes.

One of the things states are doing to increase revenues is legalizing gambling. Maryland has become the latest state to legalize slot machines. When you legalize gambling, and then tax it, this can be a large revenue generator for states - especially if there is no Las Vegas, Indian casino, or Ocean City nearby.

But if you think you are paying a lot in taxes now, wait until this economic slump hits the bottom. As the economic slump continues downward, revenues for states start to fall. This is also when demand for services and economic help - like state welfare checks - increases. So at the same time that states are seeing an increase in expenditures, there is a decrease in revenue. Add to this problem that most states don’t have a rainy day fund (because their balanced budgets don’t allow for one) and you have a situation where states need more revenue - and the only way to get it is to tax something.

If you live in Utah you are lucky. Utah has a great fiscal situation. They have all their rainy day funds filled to the limit, and spend responsibly. This allows Utah to wait out the hard times by using their rainy day funds to make up for what they get in revenue. However, for all the other states out there, you aren’t as lucky.

What are some of the taxes that are going to be seen in the coming weeks and months? Don’t be surprises if things that non-voting people use are going to get taxed. This means rental cars and hotel rooms for the most part. These are items that visitors to states use (in general) and they don’t vote, so these are politcally easy things to tax. Also tobacco has always been a target for tax increases. There are some effects of increasing taxes on tabacco - namely that it lowers usage among teenagers who have the least flexible incomes. So increases in taxes also decreases usage, which will eventually decrease the revenue.

Online businesses and sales are also gonig to feel the hit. Residents of California are supposed to pay taxes on online sales, but many do not at the time of purchase, or at tax time. This is something that the tax board may come after soon.

Other than that, the normal sources of taxes - sales tax and income tax - are going to rise. So be prepared.