To wrap up a special legislative session on highway funding, Arkansas Governor Asa Hutchinson signed a measure that will generate close to $300 million over two years to help pay for upgrades to the state’s roads and...
- City Income Taxes
City Income Taxes
Research Publication No. 12
Today more than 18 million people live in cities which impose an income tax, and in addition countless other people who commute to these cities pay a tax on the income they earn within city boundaries. The city income tax, once considered a novelty, now provides substantial revenue in more than 170 municipalities, including 21 cities with population of at least 100,000 individuals.
Much of the expansion of the city income tax has place in recent years, however, with the result that it is very difficult to obtain an overall view of this tax, and even broad questions cannot readily be answered on the basis of material available today. As a first step toward understanding this small but growing facet of municipal finance, this study brings together scattered information which has been published in recent years, filling in as many of the gaps as possible with additional material obtained directly from the cities concerned.
The goal here has not been either to attack or defend the city income tax, but merely to describe its development and present use. Evaluation of the city income tax requires detailed analysis of the major possible substitutes as well as of the income tax itself. Such an analysis is a proper subject for inquiry, but not one which has been practical within the framework of this study. Nonetheless, the type of material presented here provides essential background, not previously available, for making judgments about the city income tax.
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