States Taxes and Spending

States have been struggling to fund the most basic programs in 2011 and most likely won't be able to avoid tax and fee increases. States are now taking a closer look at business incentive programs, trying to focus more on returns on investments. They're looking at unemployment insurance tax rates and reforming or reassessing tax structures in other states, for example, sales tax exemption. There are many other taxes that states are looking at to reform, reassess, raise or decrease or even get rid of all in all. Business could benefit from these new taxes, but there is always that possibility of failure as well.

In the last two years, almost all the states have made cuts to major service areas and will most likely make more cuts to programs this year. The Recovery Act fiscal cliff will worsen funding shortfalls, more than likely in education and infrastructure, resulting in more drastic cuts in those areas from last year. Due to the loss of stimulus funds, 75 percent of the nation's school districts expected to cut teaching jobs last school year. In addition, states might attempt to shift cat burdens fro programs onto local jurisdictions, such as juvenile and adult correctional expenditures and pensions for teachers.