New Report Compares State and Local Government Tax Revenue Sources

Written by taxfoundation.org


States Rely Differently on Property, Sales, Income and Other Taxes, Census Data Shows

Washington, DC - Four New England states rank in the top 10 most reliant on property taxes, and four Mid-Atlantic states rank in the top 10 most reliant on individual income taxes. These are among the findings of newly released Tax Foundation data on various sources of state and local tax collections for fiscal year 2007, the latest Census data available for both states and localities.
"Each of the 50 states' fiscal systems vary widely, and they all rely on various sources of tax revenue due to different endowed resources and policy priorities," said Tax Foundation Senior Economist Gerald Prante, who authored Tax Foundation Fiscal Fact No. 194, "Where Do State and Local Governments Get Their Tax Revenue?"

"States rich with natural resources, such as Alaska and Wyoming, depend heavily on those tax revenue sources, while states seeking a steeply progressive tax code tend to rely more on individual incomes taxes."
The Fiscal Fact is available online HERE. Combined state and local data is best for interstate comparison because what some states accomplish with local taxes, other states accomplish with state-level taxes, Prante noted.
The report lists the percentage of tax revenue coming from property, general sales, selective sales, individual income and corporate income taxes, as well as licenses and other taxes. The 10 states that rely most on property taxes are New Hampshire (61.3%), Vermont (42.1%), New Jersey (41.7%), Texas (41.6%), Rhode Island (41.1%), Michigan (39.3%), Connecticut (38.2%), Illinois (37.1%), Florida (36.8%) and Wyoming (36.8%).
The 10 states that depend heavily on general and selective sales taxes (levied on motor fuel, tobacco, insurance premiums, public utilities, amusements and alcoholic beverages) are Washington (62.1%), Nevada (58.2%), Tennessee (56.8%), South Dakota (54.1%), Arkansas (53.2%), Louisiana (53.0%), Hawaii (51.7%), Florida (49.0%), Arizona (48.4%) and Alabama (47.8%).
States that collect the highest percentage of revenue from individual income taxes include Oregon (44.1%), Maryland (39.7%), Massachusetts (35.6%), North Carolina (32.7%), New York (31.8%), Virginia (31.6%), California (30.8%), Minnesota (30.5%), Connecticut (30.0%) and Ohio (29.9%).
Fees for licenses (motor vehicle, business and hunting or fishing), severance taxes on natural resources, stock transfer taxes and estate or gift taxes are also major sources of tax revenue for some states. The 10 states that depend most heavily on these include Alaska (52.6%), Delaware (34.1%), Wyoming (30.1%), North Dakota (20.7%), Montana (18.8%), Oklahoma (17.8%), New Mexico (17.5%), Nevada (14.3%), Oregon (12.6%) and West Virginia (12.4%).

Read this article on TaxFoundation.org for visual graphs and data
The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.

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