Special Report No. 150
In 2004 the federal government in Washington spent $2.18 trillion, roughly one-fifth of the U.S. economy. To finance that spending, it collected $1.91 trillion from 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. payers across the United States. However, the burden of those federal taxes did not fall equally on the cities, counties and states that comprise the diverse geographic landscape of the United States.
Some areas of the nation bear a heavy tax burden, while others pay comparatively little. Many previous Tax Foundation studies have estimated federal tax burdens at the state level, but none has provided detailed estimates down to the narrow geographic areas that taxpayers most closely identify themselves with, such as counties, cities and congressional voting districts.
This report presents the findings of a comprehensive 2007 study which develops the Tax Foundation’s most detailed portrait of the geographic spread of federal tax burdens to date. It provides estimates of all federal taxes—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. es, 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. es, 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, estate taxAn estate tax is imposed on the net value of an individual’s taxable estate, after any exclusions or credits, at the time of death. The tax is paid by the estate itself before assets are distributed to heirs. es and all federal 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—by major city area, county, congressional district and state, illustrating the striking diversity of impact that federal tax policies established by Congress have on communities across the United States.
• Americans in some cities, counties and congressional districts bear a much heavier burden to finance federal spending than in others.
• America’s highest-federal-tax major city area is Stamford-Norwalk, Connecticut, which pays $82,745 per household. San Francisco pays the second highest taxes at $36,409, and San Jose is third at $ 34,577. America’s lowest-tax city area surrounds Mission, Texas, and pays $7,238 per household.
• The congressional voting district with the highest federal taxes is Connecticut’s 4th district, represented by Christopher Shays (R). The second highest is New York’s 14th district, represented by Carolyn Maloney (D). The lowest federal taxes are in New York’s 16th district, represented by Jose Serrano (D).
• Forty percent of federal taxes are paid by counties that make up only one percent of the nation’s land area. California alone pays roughly 14 percent of federal taxes. Counting out Manhattan’s federal tax bill by hand would require 41 pennies to be stacked on each and every square inch of Manhattan.