- The Washington Times - Monday, November 29, 2004

Eight states — including five won by President Bush in this month’s election — increased taxes this year, according to a report released this past week.

The tax increases in Alabama, Arkansas, California, Colorado, New Jersey, Oklahoma, Rhode Island and Virginia raised a collective $2.6 billion, says the report from the Nelson A. Rockefeller Institute of Government. New Jersey, California and Rhode Island were won by Mr. Bush’s Democratic challenger, Sen. John Kerry.

Two states, Iowa and New Hampshire, which both voted Democratic in the presidential election, enacted tax cuts this year amounting to $93 million. In New Hampshire, the relief came in the form of $30 million in property-tax cuts, while Iowa’s breaks stemmed from the phasing out of an energy tax.

There has been a rapid decrease in the number of states annually decreasing taxes by 1 percent or more since 1998, when 22 states enacted cuts. In 1999, 19 states saw tax cuts.

So-called sin taxes — in this case, levies on tobacco sales — accounted for tax increases in four of the eight states this year.

Tax increases came from legislators in five of the states — Alabama, Arkansas, New Jersey, Rhode Island and Virginia. Increases in California, Colorado and Oklahoma were voter-approved.

“What we are seeing is stabilization, with little support for large tax-increase bills at the state level,” said Nicholas Jenny, senior policy analyst at the Rockefeller Institute. “We still see more states raising than decreasing taxes, but it is driven by a few states that had specific problems.”

California voters, for example, elected to add 1 percent to the personal income tax of those earning more than $1 million a year. The new levy, earmarked for mental-health programs, is projected to raise $750 million this year for the financially strapped state, which faces a budget gap of $6 billion.

“California seems to have not gone in for big tax increases,” Mr. Jenny said. “They did that by replacing [former Democratic Gov.] Gray Davis with [Republican Gov. Arnold] Schwarzenegger. They have found other ways of muddling through from year to year.”

Lawmakers in New Jersey increased the state’s top personal-income-tax rate, raising about $800 million that is supposed to fund a property-tax rebate program.

Alabama’s tobacco tax increase, from 16.5 cents a pack to 42.5 cents a pack, is projected to raise $88 million in the next fiscal year, although the sum is small compared with the $1.2 billion increase that voters turned back in September 2003.

“The voters turned down Republican Gov. Bob Riley, who was saying the state was on the verge of collapse,” said Pete Sepp, a spokesman for the National Taxpayers Union, an anti-tax group. “He did not get the help he wanted, and apparently, the state has not collapsed.”

Mr. Sepp noted that the results shown in the Rockefeller report “set the bar very low for policy-makers at the state and local level to leap over in order to cut taxes,” pointing out the two states that cut taxes. He added that the Republican Party, which has a history of being moderate on taxation, has failed.

“That is very startling, to see a number of Republican governors and legislators among the tax-hiking crowd like this,” Mr. Sepp said.

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