Fiscal Fact No. 73
The 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. Foundation has released three new datasets that show which congressional districts, counties, and major city areas (MSAs) paid the highest federal individual income taxes in tax year 2004.
The nation’s tax burden is the highest in the region surrounding New York City. Carolyn Maloney’s congressional district tops the list in terms of income taxes as a percentage of adjusted gross incomeFor individuals, gross income is the total pre-tax earnings from wages, tips, investments, interest, and other forms of income and is also referred to as “gross pay.” For businesses, gross income is total revenue minus cost of goods sold and is also known as “gross profit” or “gross margin.” (AGI). The area she represents includes part of Manhattan (New York County), which was the top county in the country by that measure. And Stamford-Norwalk, which is just east of New York, was the top major city area.
Near Maloney’s district is also the one district that has a negative federal 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. liability. Rep. Jose Serrano’s 16th district, which includes parts of the Bronx, actually receives more in refundable credits (such as EITC) than it pays in income taxes.
Below is a presentation of the top ten highest-paying jurisdictions in each of the geographic categories.
Table 1. Federal Individual Income Tax Burden by Congressional District: Highest-Paying Districts
|
Rank |
Member (Party) |
District |
Federal Income Taxes as a % of AGI |
Average Income Tax Liability per Return |
|
1 |
Carolyn Maloney (D) |
NY – 14 |
20.8% |
$32,485 |
|
2 |
Henry Waxman (D) |
CA – 30 |
20.5% |
$27,238 |
|
3 |
Christopher Shays (R) |
CT – 4 |
20.3% |
$28,250 |
|
4 |
Jerrold Nadler (D) |
NY – 8 |
19.3% |
$23,155 |
|
5 |
Nita Lowey (D) |
NY – 18 |
18.5% |
$22,196 |
|
6 |
Mark Kirk (R) |
IL – 10 |
18.2% |
$20,612 |
|
7 |
Pete Sessions (R) |
TX – 32 |
17.7% |
$13,697 |
|
8 |
John Culberson (R) |
TX – 7 |
17.5% |
$15,202 |
|
9 |
Anna Eshoo (D) |
CA – 14 |
17.0% |
$21,671 |
|
10 |
Rodney Frelinghuysen (R) |
NJ – 11 |
16.9% |
$17,001 |
Note: The federal individual income tax liability equals income tax after credits minus the refundable portions of EITC and the child tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly.
.
Source: Internal Revenue Service, Tax Foundation
View all congressional districts.
Table 2. Federal Individual Income Tax Burden by County: Highest-Paying Counties
|
Rank |
County |
State |
Federal Income Taxes as a % of AGI |
Average Income Tax Liability per Return |
|
1 |
New York (Manhattan) |
NY |
20.0% |
$25,875 |
|
2 |
Fairfield |
CT |
19.4% |
$23,479 |
|
3 |
Teton |
WY |
18.3% |
$27,015 |
|
4 |
Westchester |
NY |
17.8% |
$19,411 |
|
5 |
Pitkin |
CO |
17.6% |
$24,001 |
|
6 |
Collier |
FL |
17.4% |
$16,966 |
|
7 |
Union |
SD |
17.2% |
$14,006 |
|
8 |
Marin |
CA |
16.8% |
$18,365 |
|
9 |
Somerset |
NJ |
16.8% |
$16,502 |
|
10 |
Morris |
NJ |
16.3% |
$15,296 |
Note: The federal individual income tax liability equals income tax after credits minus the refundable portions of EITC and the child tax credit.
Source: Internal Revenue Service, Tax Foundation
Table 3. Federal Individual Income Tax Burden by Major City Area: Highest-Paying Areas
|
Rank |
Major City Area (MSA) |
State |
Federal Income Taxes as a % of AGI |
Average Tax Liability per Return |
|
1 |
Stamford – Norwalk |
CT |
22.0% |
$41,496 |
|
2 |
Naples |
FL |
17.4% |
$16,849 |
|
3 |
San Francisco |
CA |
16.0% |
$14,279 |
|
4 |
West Palm Beach – Boca Raton |
FL |
15.1% |
$11,014 |
|
5 |
Danbury |
CT |
15.0% |
$12,324 |
|
6 |
Boston |
MA |
14.7% |
$10,698 |
|
7 |
New York |
NY |
14.7% |
$9,602 |
|
8 |
Bergen – Passaic |
NJ |
14.4% |
$10,339 |
|
9 |
Newark |
NJ |
14.4% |
$10,146 |
|
10 |
San Jose |
CA |
14.2% |
$11,726 |
Note: The federal individual income tax liability equals income tax after credits minus the refundable portions of EITC and the child tax credit.
Source: Internal Revenue Service, Tax Foundation
Overall, Republican districts have an average effective rate of 11.1%, and districts represented by Democratic members also have an average effective rate of 11.1%. Overall, Democrats tend to represent disproportionately the very low-taxpaying districts, as well as a large share of the very high-taxpaying districts. For example, Democrats represent 29 of the top 50 taxpaying districts, while they also represent 43 of the bottom 50 taxpaying districts.
This release is a preview of a Tax Foundation Special Report forthcoming this spring that will present the total federal tax burden by these three geographic units. The Special Report will include estimates of payroll taxA payroll tax is a tax paid on the wages and salaries of employees to finance social insurance programs like Social Security, Medicare, and unemployment insurance. Payroll taxes are social insurance taxes that comprise 24.8 percent of combined federal, state, and local government revenue, the second largest source of that combined tax revenue. es, excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. es, and corporate income taxes, in addition to individual income taxes, paid at the federal level.
This project is designed to give citizens, researchers, media, and federal lawmakers a valuable, detailed illustration of the geographic distribution of the federal tax burden.
The income measure employed here is adjusted gross income (AGI), which is the income base for the federal income tax system. The report forthcoming this spring will use a broader income concept that more accurately reflects the proper base when computing an effective rate of all federal taxes.
The datasets released today and the final product are courtesy of a compilation of data sources from the IRS, including the public use file (microdata), Statistics of Income (SOI), and SPEC (Stakeholder Partnerships, Education, and Communication), in addition to other federal statistical sources such as the Bureau of Economic Analysis and the Bureau of Labor Statistics.
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