States Face Budget Holes If U.S. Capital-Gains Tax Doesn’t Rise

California and New York, after closing budget deficits of more than $27 billion this year, may face $1.3 billion in combined new gaps if the federal capital- gains tax rate doesn’t rise as scheduled, state documents show.

Both count on increased revenue -- $1.1 billion in California and as much as $225 million in New York -- as investors rush to sell assets before the federal capital-gains tax rate goes up to 20 percent, set for Jan. 1. Currently it’s 15 percent.