The Impact of the Fiscal Cliff on the States The state impact of
the fiscal cliff’s expiring federal tax provisions and scheduled
spending cuts is missing from the national discussion. This
study finds that the effects on the states vary greatly based on
the extent to which states are tied to the federal tax code and
federal spending. The fiscal cliff looms large in current fiscal
policy debates. Discussions about the effect of the tax
increases and spending cuts included in the fiscal cliff have
focused on the national budget and economy. But federal and
state finances are closely intertwined, and federal tax
increases and spending cuts will have consequences for states’
budgets. For example, almost all states have tax codes linked to
the federal code. - For at least 25 states and the District of
Columbia, lower federal deductions would mean more income being
taxed at the state level, resulting in higher state tax
revenues. - At least 30 states and the District of Columbia
would see revenue increases because