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These Little-Noticed Tax Hikes Are Raiding Your Wallet

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Hidden city taxesIn a tough economy, the last thing many people can afford is for the government to take more of their money. Yet at least in some places, recent tax increases have already taken a big bite out of taxpayers' wallets, and the worst may be yet to come.

The looming expiration of favorable tax rates has grabbed the lion's share of attention lately: In just over six months, much higher tax rates are scheduled to take effect. If the government does nothing, those increases would boost tax bills for people at just about every income level.

But increasingly, state and local governments have been the culprits in making life more difficult for taxpayers.

As U.S. News recently observed, states and municipalities are pulling out all the stops to try to balance their budgets in the wake of falling revenue and greater demand on services. Here are some of the things they're doing:

  • More than a dozen states have raised their sales tax rates in the past five years, with the majority of those doing so by at least a percentage point. According to IRS estimates, each percentage-point increase in sales taxes could cost the typical family of four with a $50,000 income an extra $100 to $200 per year, depending on where they live.
  • States have also hiked other taxes. Illinois pushed its income tax rate from 3% to 5%, but many states have gotten extremely creative in the places they seek higher revenue from taxes and fees, focusing on little-noticed niche sources like hotel tax or fishing licenses.
  • Cities and towns tend to depend on property taxes, which have gotten hurt badly by drops in home prices. That's required big hikes in property tax rates in many areas.

What's Next?

The trend toward higher state and local taxes isn't likely to change anytime soon. The reason is that unlike the federal government, states and cities don't have unlimited borrowing power. Even as they weigh big spending cuts on everything from essential services to employee pensions, state and local governments are trying to balance lower spending with higher tax revenue to balance budgets.

As federal income tax rates become a big issue in this election year, remember to keep an eye on the other taxes you pay. The rises you've already seen could prove to be just the tip of the iceberg.

Motley Fool contributor Dan Caplinger wasn't thrilled when his sales tax went from 5% to 6.25%. You can follow him on Twitter here.


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scortez1ner

Hi hate this

July 17 2012 at 12:56 AM Report abuse rate up rate down Reply
rwgebo1889

Obamacare tax - the biggest ever on the middle class.

June 28 2012 at 8:33 PM Report abuse rate up rate down Reply
gjterranov

Then there's the Obama tax increases that no one seems to notice!

OBAMA'S TAX HIKES
http://www.atr.org/comprehensive-list-obama-tax-hikes-a6433

Look clearly at the 2014 rate compared to the 2013 rate.

For those of you who are on Medicare, read the following. It's short, but
important and you probably haven't heard about it in the Mainstream News:
"The per person Medicare Insurance Premium will increase from the present
Monthly Fee of $96.40, rising to:
$104.20 in 2012
$120.20 in 2013
And
$247.00 in 2014."
These are Provisions incorporated in the Obamacare Legislation, purposely
delayed so as not to confuse the 2012 Re-Election Campaigns

June 27 2012 at 11:43 PM Report abuse rate up rate down Reply
shalebrook

I am apalled by the cluelessness of these posts. It seems that no one understands economcics or how much debt we are piling up due to entitlements:

Here is the "real" national debt as of June 2012:

Unfunded future social security liabilities $8.6 trillion (from Federal govt. stats)
Unfunded future medicare liabilities 38.6 trillion (from Federal government stats)
unfunded state and local public union pension plans 3.9 trillion (from JP Morgan)
State and local debt 2.5 trillion(from Federal government stats)
National debt as typically portrayed $15.8 trillion (and climbing by $15 billion each day)

Total national debt $69.4 TRILLION

Gross Domestic product annual $15.0 trillion

True national debt/GDP 463%

What you idiots do not comprehend is that the huge national debt is based on entitlement spending. Check the categories if you can draw yourselves away from the "blame the nasty business man" game.

Thew fact is that most of the private sector jobs in the US are NOT coming from the mega huge corporations. They are coming from middle market business where the owners put their own money, sweat and risk into the Company to make it grow and provide jobs. These business owners do not make mega millions each year. Nor have they been given any help from the Stimulus package or elsewhere.

The fact is that as of 2012 only 50% of the US eligible taxpayers will pay any federal income taxes-the other 50% will not. Yet the no payers will still receive entitlements and other services such as the national defense.

Yet Obama buries his head in the sand at the coming economic disaster that is fast over taking us as it already has for much of socialist Europe. The huge cost of these programs is now 40% of our national budget each year and rising if you factor in Social Security and Medicare alone. .

Educate yourselves, my firneds. Whjile Obama promises entitlements by robbing the so called rich to pay the poor, what he is actually doing is taking us ALL to bankruptcy.

June 26 2012 at 8:37 PM Report abuse +1 rate up rate down Reply
chris1011

Vulture capitalist Mitt Robme at Bain Capital when he outsourced jobs:
I will take the pension fund money that I raided from your father and run for president and you will still vote for me.

June 26 2012 at 2:55 PM Report abuse -1 rate up rate down Reply
indisposed99999

I realize its fun to point blame at a particular politician, depending on your political leanings. However, the simple fact of the matter is that this nation has been living on borrowed time for nearly 50 years. Social Security was designed to be a system that ran out of money.....its run out of money (anyone that points to the Trust Fund misses the point, which is that the treasury has to hand money to SSA to make good on the trust fund, and since the treasury is running a deficit, that means we are borrowing the money to make good on SS). Medicare will run out of money.

And on the state and local side, we have promised benefits in perpetuity to public sector employees that can't possibly be made good on. The estimated unfunded pension liability for all states and local governments is in the neighborhood of $100 trillion....thats roughly 800% of current GDP.

In our personal lives, the average american family has an income of $50K and credit card debt of close to $20K.

In other words, we have mismanaged our family finances, our local government finances, our state government finances and our federal government finances. We are now reaping that whirlwind.

June 26 2012 at 1:38 PM Report abuse rate up rate down Reply
craigmrfrn

Bush almost returned this country to what it was. A barren wasteland. (Without the Wholly Mammoths and glaciers of course)

June 26 2012 at 12:59 PM Report abuse -1 rate up rate down Reply
NOWBTJ

theives, liars, greedy lowlifes.....but in the end they will lose & perish and I will be laughing <><

June 25 2012 at 8:58 PM Report abuse rate up rate down Reply
alfredschrader

Tax revenues are falling because the economy has been ruined. Increasing taxes to shore-up the short-fall makes a bad situation worse by taking even more money out of the economy putting even more people out of work.
It's amazing how one guy has destroyed the United States.....Al-

June 25 2012 at 8:14 PM Report abuse +1 rate up rate down Reply
1 reply to alfredschrader's comment
craigmrfrn

No, it's two guys. You forgot Dick Cheney.

June 26 2012 at 12:51 PM Report abuse -1 rate up rate down Reply
patsy

My utitly bill keep going up,the state puts a surcharges on the tax. New York tax on top of tax.Then they wonder why people leave the state......

June 25 2012 at 7:01 PM Report abuse +1 rate up rate down Reply
1 reply to patsy's comment
rjoh959287

At the rate the Utility companys are going we be back to oil lamps and Candles

June 27 2012 at 9:08 AM Report abuse rate up rate down Reply