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. revenues for state and local governments grew in the first quarter, according to newly released Census data for the first quarter of 2010 (historical table included). That’s two quarters in a row of growth, possibly relieving a bit of the pressure that state and local governments have felt to raise taxes or lower spending. Among tax sources, individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. and general 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. revenues were the gainers; corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. revenue declined significantly, and property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. revenues declined slightly.
Even though the housing bubble popped in early 2008, starting a wave of foreclosures and rapid declines in housing values, local governments have mostly succeeded at keeping property tax revenue coming in by raising the rates. But the new Census data reveals that although the drop was slight, the 12-month total from March 2009 to March 2010 recorded the first decline in total property taxes since 2003.
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