How Much Does Your State Collect in Corporate Income Taxes Per Capita?

September 7, 2017

Morgan Scarboro

Morgan Scarboro

The corporate income tax is one of the smallest sources of state tax revenue. According to Census data, in FY 2015, the corporate income tax only comprised 5.3 percent of state tax collections. As we outlined earlier this year, there are several reasons why the corporate income tax share is so low on average.

Some mistake the corporate income tax as the entirety of a business’s tax burden. However, businesses pay many types of taxes outside of the corporate income tax, including sales tax, property tax, excise tax, payroll tax, and more. The corporate income tax makes up only 9.5 percent of total business taxes.

Today’s map shows how much state governments collect in corporate income taxes per capita. New Hampshire collects the most at $433 per capita, with Delaware shortly behind at $424 per capita. Delaware also levies a gross receipts tax in addition to the corporate income tax. Alaska’s ranking of fifth highest in the country may surprise people, but it is mainly due to a large number of extractive companies and the relatively small population.

On the other end of the spectrum, there are six states that do not levy a corporate income tax at all: Nevada, Ohio, South Dakota, Texas, Washington, and Wyoming. Some still show a small amount of revenue collected from the corporate income tax due to taxes on special kinds of corporations, like financial institutions. Nevada, Ohio, Texas, and Washington do levy economically harmful gross receipts taxes in lieu of the traditional corporate income tax.

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A 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.

A gross receipts tax is a tax applied to a company’s gross sales, without deductions for a firm’s business expenses, like costs of goods sold and compensation. Unlike a sales tax, a gross receipts tax is assessed on businesses and apply to business-to-business transactions in addition to final consumer purchases, leading to tax pyramiding.

A 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.