Here’s Why Stocks Have to Go Up

You’d be surprised how many people out there think states make their money from selling oranges on the side of the road. Income from wages and investment income are the top sources of revenue for 43 states. Moreover, because the stock market being weak, year over year, income taxes for the month of April fell by almost 10%.

U.S. state personal income taxes tumbled in the key revenue month of April due to lower investment returns from weaker equities and energy prices in 2015, a Reuters analysis of state data found.

This April, personal income tax (PIT) revenue fell by an average of 9.88 percent compared to the same month last year in the 32 U.S. states and Puerto Rico for which Reuters has data.
Taxes on wages and investment income are a top revenue source for the 43 states that collect it. April is the most important revenue month because it contains the tax filing deadline and the tendency of taxpayers who owe money to wait until the last minute to pay.

Personal income taxes make up slightly more than a third of states’ total general fund revenue, and sales taxes comprise roughly another third.

Collections have been volatile in recent years, including 2013’s “April Surprise,” which delivered unexpectedly high revenues to states as taxpayers sold investments to dodge an increase in federal taxes.

Collections plunged in April 2014 then rebounded last year with the help of a robust stock market.

In 2015, the U.S. benchmark S&P 500 stock index lost 0.7 percent compared with a 11.4 percent gain in 2014.

“The kinds of income that are kind of driving this are particularly capital gains related to the stock market. If you had to find a No. 1 culprit, that’s it,” said Don Boyd, Director of Fiscal Studies at the Rockefeller Institute of Government in Albany, New York.

QE for life.