WASHINGTON — State collections of tax revenue may have grown more slowly and personal income tax revenue collections may have even declined in the first quarter of this year based on preliminary figures obtained from 45 states, according to a report released on Tuesday.
State tax revenues grew by 5.7% in the third quarter and 3.5% in the fourth, after a gain of 9% in the first half of last year, The Nelson A. Rockefeller Institute of Government, the public policy research arm of the State University of New York, said in its latest State Revenue Report.
The Plains region had the greatest growth in state tax revenues, at 7.8%, followed by the Southwest region at 5.4%. The Mid-Atlantic states had the weakest growth, at 0.5%, in the fourth quarter, according to the Institute.
Personal income tax collections grew even more slowly in the third quarter, at 5%, and in the fourth quarter, at 4%, it said.
"Early figures for the first quarter of 2014 indicate even further softening in state tax collections and possible declines in personal income taxes," the report warned.
Those preliminary figures showed growth of about 0.7% growth in total tax collections as well as the decline in personal income taxes.
"The slowdown is likely due to the mirror-image effect of the initial fiscal cliff on taxpayer behavior, which had driven tax collections upward a year ago. " the Institute said in the report. "If Congress had not taken any actions to address the fiscal cliff at the end of 2012, tax rates would have risen on several types of income, including capital gains."
The fiscal cliff refers to the end of 2012 when the so-called Bush income tax cuts were set to expire and across-the-board spending cuts were to become effective.
"The large fluctuations in personal income tax collections throughout calendar year 2013 is mostly due to the temporary impact of the fiscal cliff on taxpayer behavior," the report said.
Driven by fears that federal tax rates would go up, many taxpayers accelerated their estimated payments of income in 2012. As a result, capital gains may have substantially declined in 2013, despite the strong stock market performance, according to the report.
Local property tax revenues grew by 3.0% in the fourth quarter of last year, marking the seven consecutive quarter of growth in nominal terms, the report said.
