Fiscal Fact No. 194
Introduction
Newly released Census data show how different the 50 states’ fiscal systems are. Their reliance on various sources of 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.
revenue differs widely because they have different endowed resources and policy priorities. These differences are reflected in state-local tax collections no matter how large or small a fraction of the residents’ income state and local governments have decided to take in taxes.
States heavily endowed with valuable natural resources, such as Alaska and Wyoming, will usually exploit those tax revenue sources, which they can do without too much fear of driving the activity out of state, given that those natural resources are largely immobile. States seeking a more progressive taxA progressive tax is one where the average tax burden increases with income. High-income families pay a disproportionate share of the tax burden, while low- and middle-income taxpayers shoulder a relatively small tax burden. code tend to rely heavily on 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, all else equal.
Tables 1-4 are “top ten” tables, highlighting the states that rely heavily on each of four major categories: property taxes, individual income taxes, general and selective sales taxes,[1] and “licenses and other taxes.”[2] The data are the latest available for states and localities, fiscal year 2007, which stretched from July 1, 2006 to June 30, 2007. Combined state-local data is best for interstate comparison because what some states accomplish with local taxes is accomplished in other states with state-level taxes.
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Table 1 Which Ten States Rely Most on Property Taxes? |
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|
State |
Fraction of Tax |
|
New Hampshire |
61.3% |
|
Vermont |
42.1% |
|
New Jersey |
41.7% |
|
Texas |
41.6% |
|
Rhode Island |
41.1% |
|
Michigan |
39.3% |
|
Connecticut |
38.2% |
|
Illinois |
37.1% |
|
Florida |
36.8% |
|
Wyoming |
36.8% |
|
Note: Includes residential and commercial real Source: Tax Foundation calculations based on |
|
Table 2 Which Ten States Rely Most on General and Selective Sales Taxes? |
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|
State |
Fraction of Tax Revenue |
|
Washington |
62.1% |
|
Nevada |
58.2% |
|
Tennessee |
56.8% |
|
South Dakota |
54.1% |
|
Arkansas |
53.2% |
|
Louisiana |
53.0% |
|
Hawaii |
51.7% |
|
Florida |
49.0% |
|
Arizona |
48.4% |
|
Alabama |
47.8% |
|
Note: The major selective sales taxes are levied Source: Tax Foundation calculations based on |
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Table 3 Which Ten States Rely Most on Individual Income Taxes? |
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|
State |
Fraction of Tax Revenue |
|
Oregon |
44.1% |
|
Maryland |
39.7% |
|
Massachusetts |
35.6% |
|
North Carolina |
32.7% |
|
New York |
31.8% |
|
Virginia |
31.6% |
|
California |
30.8% |
|
Minnesota |
30.5% |
|
Connecticut |
30.0% |
|
Ohio |
29.9% |
|
Note: States and localities generally lump wages, Source: Tax Foundation calculations based on |
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Table 4 Which States Rely Most on Licenses and Other Taxes? |
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|
State |
Fraction of Tax Revenue |
|
Alaska |
52.6% |
|
Delaware |
34.1% |
|
Wyoming |
30.1% |
|
North Dakota |
20.7% |
|
Montana |
18.8% |
|
Oklahoma |
17.8% |
|
New Mexico |
17.5% |
|
Nevada |
14.3% |
|
Oregon |
12.6% |
|
West Virginia |
12.4% |
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Note: In license category, taxes are imposed on Source: Tax Foundation calculations based on |
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Table 5 State and Local Tax Revenue by Source, Fiscal Year 2007 |
||||||
|
State |
Property |
General |
Selective |
Individual |
Corporate |
Licenses |
|
United States |
30.1% |
23.5% |
10.9% |
22.6% |
4.7% |
8.2% |
|
Alabama |
15.5% |
29.9% |
17.9% |
22.7% |
3.7% |
10.2% |
|
Alaska |
20.9% |
3.7% |
6.3% |
0.0% |
16.5% |
52.6% |
|
Arizona |
26.7% |
40.1% |
8.3% |
16.1% |
4.2% |
4.6% |
|
Arkansas |
14.6% |
41.3% |
11.9% |
23.7% |
4.0% |
4.4% |
|
California |
24.2% |
24.2% |
7.2% |
30.8% |
6.5% |
7.2% |
|
Colorado |
30.4% |
27.1% |
8.2% |
25.8% |
2.7% |
5.9% |
|
Connecticut |
38.2% |
14.4% |
9.2% |
30.0% |
3.9% |
4.3% |
|
Delaware |
15.6% |
0.0% |
12.7% |
29.3% |
8.3% |
34.1% |
|
Florida |
36.8% |
33.2% |
15.8% |
0.0% |
3.3% |
11.0% |
|
Georgia |
28.8% |
29.9% |
8.6% |
26.5% |
3.0% |
3.2% |
|
Hawaii |
17.3% |
38.9% |
12.8% |
23.8% |
1.5% |
5.6% |
|
Idaho |
23.5% |
26.8% |
8.9% |
29.6% |
3.9% |
7.3% |
|
Illinois |
37.1% |
16.6% |
17.2% |
17.1% |
5.3% |
6.6% |
|
Indiana |
29.1% |
25.7% |
11.5% |
24.7% |
4.7% |
4.3% |
|
Iowa |
33.1% |
21.2% |
10.4% |
25.1% |
3.0% |
7.2% |
|
Kansas |
30.5% |
26.6% |
8.9% |
24.2% |
4.6% |
5.3% |
|
Kentucky |
18.9% |
20.6% |
16.5% |
29.5% |
8.1% |
6.5% |
|
Louisiana |
14.8% |
40.0% |
13.0% |
18.3% |
4.3% |
9.6% |
|
Maine |
36.5% |
18.7% |
11.3% |
24.2% |
3.3% |
6.0% |
|
Maryland |
24.2% |
12.7% |
10.6% |
39.7% |
2.9% |
9.8% |
|
Massachusetts |
34.4% |
12.7% |
6.5% |
35.6% |
6.5% |
4.3% |
|
Michigan |
39.3% |
21.5% |
10.5% |
18.7% |
4.7% |
5.3% |
|
Minnesota |
25.8% |
19.2% |
12.6% |
30.5% |
5.1% |
6.8% |
|
Mississippi |
25.3% |
36.1% |
11.7% |
16.0% |
4.3% |
6.5% |
|
Missouri |
27.4% |
26.2% |
11.4% |
27.0% |
2.0% |
6.1% |
|
Montana |
33.8% |
0.0% |
16.4% |
25.5% |
5.5% |
18.8% |
|
Nebraska |
33.5% |
24.3% |
8.0% |
23.2% |
3.0% |
8.0% |
|
Nevada |
27.5% |
33.8% |
24.4% |
0.0% |
0.0% |
14.3% |
|
New Hampshire |
61.3% |
0.0% |
15.5% |
2.3% |
12.6% |
8.3% |
|
New Jersey |
41.7% |
16.8% |
7.2% |
22.7% |
5.6% |
6.0% |
|
New Mexico |
13.6% |
36.1% |
10.9% |
15.8% |
6.1% |
17.5% |
|
New York |
28.4% |
16.4% |
7.8% |
31.8% |
9.3% |
6.3% |
|
North Carolina |
22.5% |
21.9% |
12.1% |
32.7% |
4.8% |
6.0% |
|
North Dakota |
26.8% |
21.9% |
13.3% |
12.1% |
5.3% |
20.7% |
|
Ohio |
29.0% |
20.5% |
10.9% |
29.9% |
2.6% |
7.2% |
|
Oklahoma |
16.2% |
28.5% |
9.7% |
23.2% |
4.6% |
17.8% |
|
Oregon |
31.1% |
0.0% |
8.6% |
44.1% |
3.6% |
12.6% |
|
Pennsylvania |
29.6% |
17.0% |
11.6% |
25.5% |
4.3% |
12.0% |
|
Rhode Island |
41.1% |
18.3% |
10.3% |
22.8% |
3.7% |
3.9% |
|
South Carolina |
31.1% |
24.3% |
10.9% |
23.6% |
2.3% |
7.9% |
|
South Dakota |
34.2% |
40.6% |
13.5% |
0.0% |
3.2% |
8.5% |
|
Tennessee |
24.2% |
45.7% |
11.1% |
1.5% |
6.1% |
11.5% |
|
Texas |
41.6% |
30.8% |
16.0% |
0.0% |
0.0% |
11.6% |
|
Utah |
22.9% |
28.7% |
10.3% |
28.7% |
4.5% |
4.9% |
|
Vermont |
42.1% |
11.5% |
17.7% |
19.9% |
2.8% |
6.0% |
|
Virginia |
31.0% |
14.5% |
11.9% |
31.6% |
2.7% |
8.3% |
|
Washington |
26.8% |
47.5% |
14.6% |
0.0% |
0.0% |
11.1% |
|
West Virginia |
18.7% |
18.4% |
19.3% |
22.3% |
8.9% |
12.4% |
|
Wisconsin |
36.0% |
19.0% |
8.4% |
27.1% |
3.9% |
5.5% |
|
Wyoming |
36.8% |
28.3% |
4.8% |
0.0% |
0.0% |
30.1% |
|
D.C. |
29.3% |
16.1% |
9.4% |
25.3% |
8.1% |
11.8% |
|
Notes:
The major selective sales taxes are levied on motor fuel,
State and local governments generally lump wages, dividends,
In license category, taxes are imposed on motor vehicle
Source: Tax Foundation calculations based on data from Census Bureau’s |
[1] The major selective sales taxes are levied on motor fuel, tobacco, insurance premiums, public utilities (power, telephone service, etc.), amusements and alcoholic beverages.
[2] Major fees are imposed on motor vehicle licenses, business or corporation licenses, and hunting or fishing licenses. Major tax sources are severance taxes (natural resources), stock transfer taxes, and estate/gift taxA gift tax is a tax on the transfer of property by a living individual, without payment or a valuable exchange in return. The donor, not the recipient of the gift, is typically liable for the tax. es.
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