State Budgets and Taxes: What Will Happen in 2013?

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State Budgets and Taxes: What Will Happen in 2013?

2013 is a year of many expectations. In the USA, the new government (the Obama government) has been given another lease of life to implement its policies and affect the lives of the common Americans for the next 4 years.


There is a school of thinking that the federal fiscal cliff has the potential on unloading a massive state tax fiscal cliff or disaster if left unchecked. The main reason for this expected increase in the tax bill arises from the fact that some of the states, and in essence most of the states, rely on the federal government to sort their programs. If this trend spills over to the next year, then the federal government will have to find new ways of sustaining the state's programs. The most common way that governments use to raise money for their needs is through taxation. An increased program bill can only result in an increased tax bill. According to various sources, the federal government provides support of up to 20% to the different states. In addition to this problem, the states will have to balance their budgets in a way that they can cut spending and increase the revenue that they receive. The result of these actions may include spending cuts and an increase in the tax bill to the ordinary citizens.


Putting this in perspective, at least>48 states in the USA have budget deficits accumulating a total of $581 billion

in the last four years only. How will different states seek to cover their deficits? Well, the rumor around town and in government is that there are going to be quite a number of changes that will tax place especially in relation to the taxation threshold. There have been suggestions to increase the number of taxes such as sales tax. However, not all states will follow the same path when trying to cut their deficits. In fact, it is expected that the most successful states are those that will come up with innovative ways of ensuring that the deficits are dealt with without increasing the taxes. Already, there is much public outcry about the increase in the federal debt, an issue that caused a lot of problems for the Obama administration during the campaign.


2013 is a year that promises to be one with many solutions. However, it is also a year in which individuals will have to undergo some “baptism of fire” so to speak if the states in the USA are to achieve their long term goals.

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