U.S. state revenue growth has slowed sharply: Rockefeller Institute
WASHINGTON (Reuters) - The strong revenue growth that U.S. states enjoyed early in 2013 from taxpayers taking advantage of expiring tax breaks has ended, with revenues registering only a scant gain in the fourth quarter, the Rockefeller Institute reported on Tuesday.
Revenues likely grew only 3 percent in the fourth quarter from the same period the year before, according to Rockefeller, which closely follows state budgets as the public policy research arm of the State University of New York.
In comparison, state revenues grew 6.1 percent in the third quarter and 9 percent in the second.
"The state personal income tax revenue picture in the first two quarters of calendar year 2013 represented the strongest growth since the start of the Great Recession," Rockefeller found.
"We now are witnessing the earlier warnings that the 'bubble' in income tax receipts would be short-lived. And, quite likely, the growth in personal income tax collections will be much softer in the first half of 2014 as well."
Many taxpayers took advantage of breaks set to expire at the end of 2012 and sold off investments or accelerated bonuses. Because many states pattern their tax codes after the federal government's, their income tax revenues subsequently shot up.
Personal income taxes alone only increased 1 percent in the fourth quarter of 2013 from the same quarter in 2012 and 5.3 percent in the third quarter from the third quarter of 2012.
That compares to 18.4 percent growth in both the first and second quarter of 2013, and 10.8 percent in the final quarter of 2012.
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