WASHINGTON May 3 Only about half of U.S. states
collected as much in tax withholdings as they expected in April,
even though collections grew 3.6 percent on average from a
year-ago, according to data released on Friday
The Liscio Report, an economic newsletter, said that the
percentage of states that met their expectations for tax
withholdings rate in April compared to more than 80 percent of
states in March.
April is typically a key month for the taxes withheld from
employees' paychecks and paid directly to the government.
State withholding collections this year, however, have been
affected because many companies and individuals late last year
sold off investments or made other financial moves to avoid
potentially steep tax bills in the new year due to expectations
that certain lower tax rates would expire at the end of 2012.
"In the past, March and April would have included
bonus-based collections, which were largely accelerated into
2012, so although our contacts are concerned about April's
weakness, they are also aware that they have been through a few
years of weak collections in spring and summer, and are taking
that sensible 'wait and see' attitude," the newsletter said.
President Barack Obama and the U.S. Congress decided to
extend many of the tax breaks in their deal on avoiding the
State revenues are now surpassing the peaks they reached
before the recession, largely on growth in personal income
taxes. Investors in the $3.7 trillion municipal bond market
regard the increases as good news.
"In our view, this growth trend is positive for overall
municipal credit quality, although isolated risks still remain,"
said U.S. Trust in a special report on tax-exempt fixed income