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1 Elizabeth Malm & Ellen Kant, The Sources of State and Local Tax Revenues 1 (2013)

handle is hein.taxfoundation/ffdfexz0001 and id is 1 raw text is: January 29, 2013 No. 354 The Sources of State and Local Tax Revenues By Elizabeth Malm & Ellen Kant In September, the Census Bureau released its most recent Annual Surveys of State and Local Government Finance data, which provides a comprehensive picture of the funding sources of state and local governments for the 2010 fiscal year.1 State and local governments obtain income from a variety of sources, and the breakdown changes drastically from state to state. Proportions vary based on the types of taxes and fees administered within state borders, the types of resources within the state, the amount of intergovernmental transfers, and the policy priorities of state and local governments. For example, when a state has an abundance of natural resources, a state is able to collect large revenues from taxes on those resources that not often financed by state residents themselves. Instead, the state may be able to export the economic burden of those taxes to nonresident consumers of minerals and mineral-based products in the form of higher prices.2 States such as Alaska and Wyoming can do so without driving much economic activity out of the state due to the fact that resources such as natural gas and coal are relatively immobile.3 Other types of taxes that a state government may rely heavily upon are personal income taxes, corporate income taxes, property taxes, or sales and gross receipts taxes. Here, we provide an overview of where state and local governments together obtain their tax revenues (a subcategory of overall revenues). State and local governments tend to obtain the largest portion of tax revenues from property taxes and sales and gross receipts taxes. Another large source of revenue is individual income taxes. Figure 1 provides a breakdown of sources for total U.S. state and local tax revenues in fiscal year 2010-35 percent came from property taxes and 34 percent came from sales and gross receipts taxes. Local government tax revenues tend to be mainly funded by property taxes-in 2010, local government obtained just over 75 percent of their 2010 tax revenues from property taxes.4 The main source of revenue for state governments, however, was taxes on sales and gross receipts. In 2010, the states received just under half of their tax revenues from sales 1 U.S. Census Bureau, State & Local Government Finance, fiscal year 2010, /wv~e.u. v,#:.:m.:/ 2 Elizabeth Maim and Gerald Prante, Annual State-Local Tax Burden Ranking, TAX FOUNDATION BACKGROUND PAPER NO. 65 (October 2012), ::/ a:;ud-:ooJs elaxoud-:ooglisloc/P2200BuesRe 4tE SGerald Prante, Where Do State and Local Governments Get Their Tax Revenue?, TAX FOUNDATION FISCAL FACT NO. 194 (Oct. 9, 2009), h.;//xudai o a ceiee-os ea:-loa.geren sgtthi-:areee. See also Ryan Forster & Kail Padgitt, Where Do State and Local Governments Get Their Tax Revenues?, TAX FOUNDATION FISCAL FACT NO. 242 (August 27, 2010), ./ aoudainolies aoudtno/: e/oc/24pd 4 U.S. Census Bureau, State & Local Government Finance, fiscal year 2010O, :l .-ce us ;o/siae.

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