A healthy jump in state revenues in December

January 10, 2013 15:39 pm

by Bill Dawers · 14 comments

In December 2006, Georgia’s taxes and other revenues totaled $1.63 billion. In December 2007, the total was slightly higher, but still rounded to $1.63 billion.

And then came the deep recession.

By 2011, collections in December had recovered to $1.54 billion.

Total taxes and other revenues in December 2012 totaled $1.69 billion — clearly surpassing pre-recession levels with a 9.8 percent increase over 2011.

The revenue categories that are the best indicators of the current state of the economy both showed healthy year-over-year gains. Gross sales and use tax rose 3.9 percent and individual income tax rose 11.8 percent in December compared to a year ago.

Corporate income taxes make up less than 10 percent of the state’s revenues, but those also increased 8.2 percent.

Now, it’s worth noting that if we adjusted all of these numbers for inflation, we’d still be significantly below pre-recession levels. And as the AJC notes: “The increase was welcome news as Deal’s aides are preparing a budget that will be presented to lawmakers during the legislative session that begins Monday. But the gains aren’t expected to be enough to stave off a new round of belt-tightening.”

But these are good numbers, especially considering the cable news networks would have had you believing that Americans spent all of December hunkered down at home watching the debacle about the so-called “fiscal cliff”.

 

sgunning January 10, 2013 at 6:28 pm

All good new for sure but, with Georgia being such a conservative state with all levels of government in Republican hands, why do we still have income and corporate taxes? Bobby Jindal just proposed eliminating those taxes; are our state republicans really conservatives or simply run of the mill, do nothing politicians? You would think that with the Fair Tax being such a popular idea here that it would be easy to convert to a state level “Fair Tax”. Just sayin’.

saltycracker January 11, 2013 at 7:37 am

The state & locals have played with various approaches – GREAT, HOST…to move to consumption taxes but they all morphed so fast to address special interests or did not kill off the replaced taxes that they were soon almost unrecognizable.

Nationally Forbes had some good remarks on Fair, Flat & 9-9-9.
http://www.forbes.com/sites/nathanlewis/2011/10/13/flat-tax-vs-fair-tax-vs-herman-cains-9-9-9-plan/2/

sgunning January 11, 2013 at 12:10 pm

Needs to be tried again if we are going to be competitive (and govern by conservative principals).

IndyInjun January 11, 2013 at 12:32 pm

Exactly when did it get to be “conservative principals” to switch to a consumption tax on previously-taxed income/savings/retirements just as the baby boomers have to retire? The GOP doesn’t have a death wish and that is why the farcical fair tax will get nowhere.

mpierce January 11, 2013 at 6:32 pm

1) There are already imbedded taxes in the products/services they buy with the system currently have.
2) Retirees get more in 3x more in medicare benefits then they put in.
3) Baby boomers have yet to pay for what they have spent (through the government). They should keep the inflated gains, but pass their bills on to future generations?

It’s better to tax consumption than production.

IndyInjun January 11, 2013 at 8:20 pm

Yes and when they have to eat dog food they won’t have to pay such a fairtax.

You can bet that every dollar of lower wage arbitrage – foreign goods don’t have embedded taxes- will be briskly rewarded by a populace beseiged by higher prices all over the place and an onerous 30% tax (34% admitted by Linder to be revenue neutral. Folks won’t just look at having saved $1 by buying cheap foreign goods, they will see $1.30 in savings.

IndyInjun January 10, 2013 at 9:09 pm

Too bad that population increased 13% from 2006 to 2012 matched with a 4% gain for December 2012 over December 2006 not to mention that inflation was a cumulative 14% over that period.

martha zoller January 11, 2013 at 7:18 am

Don’t forget the federal revenue was up 11% in December due to people moving transactions into December to avoid higher taxes in January. That may be at play here. But I’m happy to see better revenues and I hope it’s a trend not a blip.

IndyInjun January 11, 2013 at 7:38 am

People also tend to make state income tax payments before December 31, so as to make those payments deductible on a cash basis in the current year. With the threat of cap gains rates going up, there was an impetus to take gains in 2012.

Truly frugal people in regions where TSPLOST passed also loaded up before January 1.

Good point, Martha.

John Konop January 11, 2013 at 8:23 am

Some key factors i follow: The closer gas is to 4 bucks a gallon I generally see a slowdown in business……. closer to 3 bucks opposite…..Second factor is housing, the turn of inventory is less than 6 months( under5 now),another good factor ie building starts pick up…….Third factor is sales at places like Home Depot……….ie people investing into housing……..finally restaurant sales ie big indicator of consumer confidence……forget surveys watch action over…….sending in restaurants is a strong indicator about confidence……..

I do think we will see good growth for the next 3 to 5 years, driven by energy and housing……..the real question is can we sustain it via a lack of solutions for healthcare, entitlements and not enough investment into infrastructure? Will we use irrational debt levels government and consumer to fuel this game, rather than solve the problem? If not we will just repeat the last cycle and it will be harder and come back quicker.

IndyInjun January 11, 2013 at 9:24 am

“Growth” in these parts is purely a function of mad federal spending. Money is no object if you are in the states medical school, in the NSA at the Fort, performing nuke alchemy (or just twiddling thumbs at the “bomb” plant)……….when spending gets cut this place will look like Detroit with a nice golf course.

The Fed is going to print to infinity and folks will call this “growth” just like they have been fooled into doing for the last 40 years.

This train is gonna hit the wall because the taxes paid by the ponzi beneficiaries won’t cover the ponzi outlays and there are only 12 million people making things having to support the government ponzi and the banking ponzi which got to be 40% of the economy.

Reversion to mean is gonna be, well……mean.

Accelerated tax payments into 2012 to keep from paying them and even more taxes in 2013 might be skewing the stats and playing with gullible minds.

John Konop January 11, 2013 at 9:36 am

…………Money is no object if you are in the states medical school, in the NSA at the Fort, performing nuke alchemy (or just twiddling thumbs at the “bomb” plant)……….when spending gets cut this place will look like Detroit with a nice golf course………..

I big wild card in our favor is energy which drives many elements of the economy as we become more independent and produce over buying………I do agree that we cannot afford the policemen of the world foreign policy anymore………..I would argue much of the money was spent overseas as well as the production, and the cuts on a macro could be made up via energy and technology spending on viable commercial products over bombs…….. Also we must deal with healthcare and entitlements…………….

IndyInjun January 11, 2013 at 12:02 pm

When you find yourself in a skid, you must steer into it, which goes counter to all instinct. When you are talking about an individual’s decisions, this is hard enough. When you are addressing society, it is impossible. We must focus on picking up the pieces.

The seeds that are generating this nascent revenue increase will grow into choking vines. Not even world reserve currencies are above math and are vulnerable to supreme abuse.

The collateral damage being done to state pension obligations by the same ZIRP fueling spending and inflated revenues is but one example.

saltycracker January 11, 2013 at 5:34 pm

Indy,

Don’t let negative things send you in the wrong direction. Actuarians say state and local pensions are…… with all their compounding late in the game, early outs, 30 yr. at at high % of recent salary, survivor benefits and COL’s…..in a pool of money that will grow on average 7.5% to 8% forever and there will be plenty of money for all.

That return on “conservative” investments is overseen by very high paid public managers that select well paid companies to manage it. It is fully guaranteed by the taxpayers of Georgia. What could possibly go wrong ?

I have two requests we need to push:

1. Will the state accept a private citizen’s retirement money under those terms (8% @ guaranteed) ? (My financial folks will not guarantee any return rate like that).

or 2. If not 1, then will the state release the taxpayer from guaranteeing the pool of money or will they adjust the payout if things go south ?

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