New York, New Jersey, Connecticut and Illinois—states that are the most heavily reliant on the taxes of the wealthy—are now among those with the biggest budget holes. A large population of rich residents was a blessing during the boom, showering states with billions in tax revenue. But it became a curse as their incomes collapsed with financial markets.
Arriving at a time of greatly increased public spending, this reversal highlights the dependence of the states on the outsize incomes of the wealthy. The result for state finances and budgets has been extreme volatility.
Absent California, WHICH IS HAMPERED BY SHACKLES PLACED ON THEIR ABILITY TO RAISE TAXES *koffkoffProposition13koffkoff*, all of these states, while certainly struggling, are in the process of balancing their budgets, mostly by cutting spending and imposing some taxes.
But the states that are in REAL trouble are Texas, Florida and other states run by Republicans who are destined to maintain the "tax as little, spend as little" as possible mantra.
Once you appreciate that fact, you realize that Robert Frank is talking out of his ass.
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