This is a natural result of having a large positive adjustment in FY 1999-00. Second, tax cuts enacted by the General Assembly will reduce revenues. A full-year impact of the tax rate reduction will influence the growth rate. Overall, we expect that individual income taxes will increase at a 7.0 percent compound average annual growth rate during the six-year forecast period. Corporate income taxes will be volatile during the forecast period.
Corporate taxes are typically the most volatile state tax.
Chart 4 shows the growth rates in this tax during the past 15 years, as well as the projected rates during the forecast period. Corporate income taxes have been increasing at a robust rate in recent years, coinciding with larger corporate profits. However, corporate profits are under pressure and are expected to decline in FY 2001-02. Slower consumer spending, high energy prices, and increasing The ratio of net wealth to disposable income remained in a consistent range just below five through 1995. An increasing portion of spending growth comes from wealth gains rather than income gains.