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1 Ryan Forster & Kail Padgitt, Where Do State and Local Governments Get Their Tax Revenue 1 (2010)

handle is hein.taxfoundation/ffcecxz0001 and id is 1 raw text is: ....... N.- gkg. . I'N 4% in TAX m August2 2010 No. 242 Where Do State and Local Governments Get Their Tax Revenue? By Ryan Forster and Kail Padgitt Introduction Newly released Census data show how different the 50 states' fiscal systems are. Their reliance on various sources of tax 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 States' reliance on various residents' income state and local governments have decided to takein txes.sources of tax revenue dffers take in taxes. widely because they have States heavily endowed with valuable natural resources, such different endowed resources as Alaska and Wyoming, will usually exploit those tax revenue andpolicy priorities. sources, which they can do without much fear of driving the activity out of state, given that those natural resources are largely immobile. States with more tourism like Nevada and Florida rely more heavily on sales taxes so that they can forgo taxing income. A calculated decision by a state to concentrate taxation in a few sources is a plus for the state's taxpayers, significantly lowering the administrative burden for government and taxpayers and making the state tax climate conducive to economic growth. Of course, that means relying more heavily on the remaining tax sources for revenue. 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 2008, which stretched from July 1, 2007, to June 30, 2008. 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. In particular, several states have converted traditionally local property taxes that fund public schools into state-level taxes in response to court decisions. 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 taxes. Ryan Forster is Adjunct Scholar and Kail Padgitt, Ph.D., Staff Economist at the Tax Foundation.

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