State and local government tax revenue tumbled in the second quarter, the Census Bureau reported yesterday, as a contracting economy and escalating unemployment stymied tax collections.
State and local governments collected $308.28 billion in tax revenue in the second quarter, a 12.2% decline from the second quarter of last year.
The most damaging hit by far came from dwindling individual income taxes, which plunged to $77 billion from $105.86 billion.
The 27.5% decline in personal income taxes follows an unemployment rate that shot up from 5.6% at midyear in 2008 to 9.5% at the end of the second quarter in 2009.
According to the Commerce Department’s report on gross domestic product for the second quarter, wages during the period plummeted to $6.23 trillion from $6.54 trillion.
The total value of all goods and services was 2.4% lower in the quarter than the second quarter of 2008.
Sales taxes shrank 9.3% to $72.52 billion.
Most other tax revenue sources, such as property and corporate income taxes, were fairly stable.
The decline in taxes hit states harder than local governments. State tax revenue slipped 16.6%, to $199.73 billion from $239.52 billion.
That is because states rely on income tax revenue more than local governments. About a third of state tax revenue comes from personal income taxes.
State receipts of personal income taxes dwindled to $71.58 billion from $98.72 billion.
