Five states where tax hikes have hit hard

Most of the states across the country have come to a conclusion: They have to raise taxes to help with the budget deficits.

The five states hit hardest by new taxes as written by SmartMoney are:

1) California – This state has a HUGE deficit. It has gotten so bad in California that they the state is starting to pay for things with IOUs. The state deficit estimate for 2010 is almost $25 billion with the state and local tax burden being 10.5%. Voters in the state voted against sales and income tax increases, and with unemployment there nearing 12% and the worst housing market in the country, anyone could understand their unwillingness to vote FOR higher taxes. One of the things on the table now for the state to start raising some extra tax money? Legalize marijuana…

2) New York – With a state deficit estimate for 2010 at $17.6 billion and the state and local tax burden of 11.7%, this state ranks number two in SmartMoney’s poll. The governor of New York, David Paterson has unsuccessfully tried to pass an 18% tax on soft drinks, however he was able to raise taxes on cigarettes and wine. New Yorkers have the second highest tax burden due to the income tax rate of 7.85% for those earning more than $200K a year.

3) Florida – Florida’s deficit estimate for 2010 is $6 billion and the state and local tax burden is 7.4%. In May, Florida passed next year’s budget and included a $1 per pack increase on cigarettes as well as new and higher fees to renew a driver’s license or register a vehicle. While Florida does have the third lowest tax burden in the nation, the state has been hit hard by decreasing home values and huge budget deficit as a result. The deficit could mean more taxes in the future.

4) Massachusetts – Massachusetts has a state deficit estimate for 2010 of $3 billion and a state and local tax burden of 9.5%. While right now, it is middle of the road when it comes to it’s tax burden ranking (23rd in the nation), it is getting ready for some hefty tax increases. When the budget was passed last week, it included new taxes including a 1.25% increase in the sales tax from 5% to 6.25%. Satellite television subscribers will also be tinged with a 5% tax on satellite services.

5) Nevada – With a deficit of $1.2 billion and a state and local tax burden of 6.6%, it doesn’t seem like Nevada is doing that badly, but it had the same major problem that California did: rapidly decreasing property values. It also had a history of low taxes, there was no personal income tax and it imposed some of the lowest taxes on businesses in the country. It once got the majority of its revenue from tourism, so it wouldn’t have to tax residents as heavily. In Nevada, the sales tax is going up along with hotel taxes. It also has the highest deficit to budget ratio of 32%.