January 1, 1994

State Tax Rates and Collections in 1993

Download Special Report No. 27

Special Report No. 27

Executive Summary
State-level tax and fee collections continued their decade-long upward trend in Fiscal Year (FY) 1993. In fact, the 4.9 percent inflation-adjusted growth rate from FY 1992 to FY 1993 constitutes the largest annual increase since 1985.

The record-setting state tax increases enacted in 1991, accompanied by recent economic growth, explains in large measure the rapid increase between 1992 and 1993. In fact, state tax collections grew 3.7 percentage points (or 1.7 times) faster than personal income. By comparison, state tax collections grew at an inflation-adjusted annual average of 1.1 percentage point (or 1.4 times) faster than personal income between 1983 and 1993.

Between 1983 and 1993 the experience of different states varied dramatically. It also shows that between 1992 and 1993 Alaska (a special case because of oil drilling), Mississippi, Colorado, North Dakota, and Tennessee had the highest tax growth relative to personal income growth. In contrast, Nebraska, Idaho, Pennsylvania, West Virginia and Montana constitute the top five states where personal income grew faster than state taxation. (If Washington, D .C. were a state, it would rank third, above Pennsylvania.)