As talk about state budget crises becomes more commonplace, it’s clear that a majority of legislatures around the country are considering raising taxes to bolster revenue. The two types of tax hikes most likely to affect consumers are increases in income taxes and sales taxes.
Some states like California and New York have already passed their budget plans, with California enacting the largest tax increase in the state’s history.
Currently, at least ten other states are considering sales or income tax increases. Voting for tax hikes can be a risky move for many politicians, mainly due to voter backlash, but also because these added costs on vulnerable consumers and businesses can exacerbate a tough economic situation.
With state rainy day funds drying up, the probability that tax hikes will be passed in these states is very likely. Don’t find yourself in a similar budget hole. If you haven’t started building your own rainy day fund already, Get Rich Slowly has some tips on saving money and building a financial cushion.
