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24/7 Wall St.: 6 States Where Taxes Are Soaring

5. Rhode Island

Increase in personal income tax: between 1% and 5%
Expenditure per capita (2008): $6,093 (5th highest)
2009 budget shortfall: 26.6% (3rd highest)
Home price decline from peak: 27.0% (7th largest)

Between 1977 and 2008, the state of Rhode Island has doubled its spending to $6,093 per person. The increase was driven by some of the biggest state programs in the country. In paying out unemployment benefits, the state covers 46.5% of weekly wages, the second-highest percentage of any state. Rhode Island is also among the top ten per capita spenders for education, Medicaid, and pensions.

According to Brookings, the state’s tax revenue has been declining for decades as a result of a loss of manufacturing jobs. The slowing economy rebounded briefly during the housing boom leading up to the recent recession. Unfortunately, the real estate market collapse has put the state in an even worse position than it was before. Rhode Island has been forced to make across-the-board cuts in spending as well as increase taxes. The state increased cigarette taxes by more than 5%, and it raised personal income tax between 1% and 5%.

(AP Photo)

More From 24/7 Wall St.:
America’s Disappearing Restaurant Chains
American Cities Where Manufacturing Is Booming
States Where Seniors Cannot Afford to Live

The opinions expressed are solely those of the author and do not necessarily reflect the views of Comcast.

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