NCPA - National Center for Policy Analysis

Coffers Bulging, States Eye Internet Tax

December 1, 1999

States are in the best fiscal position they have experienced in decades. But many state officials want to tax Internet commerce. They contend they need new revenues for a host of programs, which analysts say are already receiving ample funds.

  • State budgets grew by more than 6 percent in 1995 and by almost that much in 1998.
  • States now spend about $600 more per person in inflation-adjusted dollars than they did in 1990.
  • Tax revenues grew 45.3 percent between 1992 and 1998 -- while inflation and population together grew by less than half that.
  • Federal aid to the states swelled from $144.7 billion in 1990 to almost $216 billion in 1998, after adjusting for inflation.

Even with all their spending, 46 states have managed to create budget surpluses -- and the remaining four achieved balanced budgets.

The current federal moratorium on taxing Internet sales expires in April 2001. A number of economists and interested parties are urging Congress to make that moratorium permanent.

Source: Editorial, "No Tolls on the Information Superhighway," Investor's Business Daily, December 1, 1999.


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