Thursday, January 3, 2013

Notes on State Taxes

The motivation for creating the featured chart today came from a post on Market Size Blog on the subject of sales taxes collected by states in 2011 (link). I went in search of historical data and found them on the Census Bureau website (link). My presentation shows all revenues collected by states for the 20-year period, 1992-2011. Here is the graphic:

The chart clearly shows the importance of sales tax collections in state-level revenues. In this 20-year period they have averaged to 48.3 percent of total state income, and the same percent in 2011. They reached their highest share in 2003 (49.9%), the same year when state income taxes reached their lowest share in this time period (38.3%). Note here the much more cyclic behavior of state income taxes. Sales taxes also weaken in period of economic down-turn, but nowhere near as sharply as income—thus underlining Monique’s comment that sales taxes are regressive. They fall most heavily on the poor.

The third curve is a combination of property taxes, license fees, and a category labeled All Other.  Of these, in 2011, Licenses accounted for 56.3 percent, All Other for 28.5 percent, and Property taxes for 15.1 percent. Property taxes have been losing share of this category, having been 18.3 percent in 1992—and as low as 13.6 percent in 2008 when real estate fell down its own unique cliff and nearly sank the whole economy.

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