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1 Andrew Chamberlain & Gerald Prante, Economic vs. Legal Incidence: Comparing Census Bureau Figures with Tax Foundation Tax Burdens 1 (2006)

handle is hein.taxfoundation/fffjxz0001 and id is 1 raw text is: r:OuU NDAT10N.
June 9, 2006
Economic vs. Legal Incidence: Comparing Census Bureau Figures with
Tax Foundation Tax Burdens
by Andrew Chamberlain and Gerald Prante
Fiscal Fact No. 59
Every one to two years, the U.S. Census Bureau releases new data on state and local tax
collections around the country. Each release is widely reported in the press, resulting in a
large number of news stories about state and local taxes throughout the popular media.
This periodic surge of interest in state and local taxes frequently leads to confusion about
the relationship between Census Bureau state and local tax collections figures, and Tax
Foundation figures for state and local tax burdens. The purpose of this Fiscal Fact is to
explain the difference between these two measures of state and local taxes, and clarify
when each is most appropriate for different kinds of tax analysis.
Latest Census Bureau Data Release
This month, the Census Bureau released new figures for state and local tax collections for
Fiscal Years 2003 and 2004 (available at
http:?w ,/Nwv.census.gov/govs/w,'estinateO4.html). The latest release was consistent
with previous years, showing that governments in the Northeast generally continued to
collect the nation's highest state and local taxes, while those in Southern states generally
collected the least. Overall, the State of New York ranked first in state and local tax
collections per capita, followed by Connecticut, New Jersey, Wyoming and
Massachusetts. States with the lowest state and local collections were South Dakota,
Tennessee, Arkansas, Mississippi and Alabama.
Tax Collections vs. Tax Burdens
A common source of confusion among users of Census Bureau figures is the difference
between tax collections and tax burdens, such as those calculated by the Tax Foundation
(available at                                              W -.hile the two
measures are related, there are important differences between them that lawmakers,
journalists and taxpayers should be aware of.
The most important difference is that Census Bureau figures measure what economists
call the legal incidence of state and local taxes, while Tax Foundation figures measure

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