What will the States Think of Next?

If you watch the news at all, you know that the sates are suffering from revenue losses.  In Georgia where I live, there have been significant reductions in education and social services and more cuts are on the way.  If you also watch or read the news you will also see that states are coming up with some creative and not so creative ways to generate more money for state programs. 

The most obvious sales tax change that will occur in many states (CA, NY, NC, IL, etc) is an increase in either the state or local tax rate.  In some cases the rate of tax is increasing from 4.5% to 5.5%.  That's a 22% increase in tax rate.  That's 22% more money going to the government and away from other consumption. 

States are also active in increasing their contact with non-registered businesses and trying to get more out-of-state companies to collect sales tax.  Just look at the commotion around the so-called Amazon affiliate nexus statutes that have been passed in many states.  I would suspect that next legislation session would be even more active in these areas. 

States are also trying to expand the tax base by stretching the limits of existing statutes and by passing new statutes to tax services or different types of property.  Some are removing exemptions or having other sunset provisions on exemptions.

To me it seems like this is all out warfare by the states to collect as much tax as possible from everyone they can. I understand the need for state revenue and the benefit of the goods and services it can provide.  I also understand that the more aggressive states become in collecting tax the more creative companies can become at finding ways (some legal and some not legal) to avoid paying the tax.  Having a complex and ever changing set of rules does very little to expand the long term tax base that states depend on.  

It will take a while for the state revenues to return to the levels they were in 2008.  In the mean time, I would expect states to become very creative at how they extract tax revenue from us as consumers and from non-compliant businesses.  Ignoring the rules could cost businesses a significant amount of money.