Retail Sales and Individual Income Taxes in State Tax Structures

January 1, 1962

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Project Note No. 48

Executive Summary The startling growth of state government expenditures from $7.1 billion in 1946 to $31.6 billion in 1960 indicates the heavy pressures to which state tax structures have been subject in the post-World War II years. It may be that the degree of pressure will be somewhat less in the future. Nevertheless, most states still face large needs and demands for increased expenditures. They must decide to what extent increased state government seniors can be provided, and if so how these increases are to be financed. Among the alternatives are greater utilization of existing taxes or adoption of new taxes.

The purpose of this study is to examine the present and prospective role of the retail sales tax and Ike individual income tax in state tax structures. The study analyzes the characteristics of these taxes, the extent of their utilization, factors affecting their further utilization, and the advantages and disadvantages as compared with each other and with other forms of taxation. The study does not examine in detail the question of the level and extent of services provided by state governments, but decisions on the expansion of existing programs and adoption of new programs will obviously affect the seriousness of the tax problem.


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