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How Many Jurisdictions in the U.S. Charge a Local Income Tax?

By: Nick Kasprak, Joseph Bishop-Henchman

Residents in the vast majority of the United States’s approximately 18,000 municipalities (cities, towns, villages, etc.), do not pay a local income taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. (although they pay other local taxes, such as property and sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. ).

We at the Tax Foundation are preparing a new report examining local income taxes, including their rates and how they’re collected. In Maryland, for instance, county income taxes are paid on the state income tax return, streamlining compliance. In Kansas, on the other hand, taxpayers must fill out a local intangibles tax return and mail it to their county clerk, separate from complying with state and federal income taxes.

Our question to you:

How many local income tax jurisdictions are there in the United States?

(We know the answer.) This includes income taxes levied by all sub-state jurisdictions, including counties, cities, townships, and school districts.

Submit your guess here. The last day to guess is Tuesday, August 30, 2011.

The closest guess will win a free Tax Foundation tape measure and level, along with a complimentary copy of our Facts & Figures booklet.

On Wednesday, August 31, 2011, we’ll announce the right answer and the winner, along with our new local income tax report!

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