Table of Contents
- State Exposure Varies
- Income Inequality
- Top Taxpayers’ Reliance On Capital Gains
- Top State Tax Rates
- Income Tax Dependence
- Research Methodology
Key Takeaways
- In past recessions, stock market declines haven’t affected U.S. state revenue collections uniformly, and thus some states are more exposed than others.
- At the same time, some states have received windfall capital gains tax revenue in recent years as the stock market has reached new highs.
- States most at risk from a drop in capital gains tax revenue rely on a disproportionate share of income tax from their top taxpayers, have high top tax rates, and derive a high proportion of their operating revenue from income tax.
- When the cycle turns, states we see as having potentially the greatest exposure to a drop in capital gains tax include in order of risk: California, New York, Connecticut, Massachusetts, and Oregon.