States Are Rejecting Millionaire Taxes
By Steven Sloan – Fri Jun 10, 8:08 am ET
Millionaires can breathe a bit easier. While President Barack Obama says he wants to let income tax cuts that benefit only the wealthiest Americans expire in 2013, several states are rolling back tax increases for top earners.
New York’s highest tax rate on incomes exceeding $500,000 will fall back to 7.85 percent, from 8.97 percent, this year. Maryland’s 6.25 percent tax on incomes above $1 million expired at the end of 2010, while California’s top tax rate for millionaires has dropped to 10.3 percent from 10.55 percent.
At least seven states instituted temporary so-called millionaire taxes during the recession. Those levies are becoming harder to justify now that state revenues are rebounding. Overall, state tax revenue grew 12 percent in April compared with a year earlier, which may trim $20 billion from estimated state budget shortfalls, according to a recent Goldman Sachs (NYSE:GS – News) report. The soak-the-rich drive “just petered out,” says Joseph Henchman, vice-president for legal and state projects at the Tax Foundation in Washington, a group focused on lowering taxes. “All of these states are backing away now.”