Category Archives: Taxation

USAFacts

Source: USAFacts, 2017

USAFacts is a new data-driven portrait of the American population, our government’s finances, and government’s impact on society. We are a non-partisan, not-for-profit civic initiative and have no political agenda or commercial motive. We provide this information as a free public service and are committed to maintaining and expanding it in the future.

We rely exclusively on publicly available government data sources. We don’t make judgments or prescribe specific policies. Whether government money is spent wisely or not, whether our quality of life is improving or getting worse – that’s for you to decide. We hope to spur serious, reasoned, and informed debate on the purpose and functions of government. Such debate is vital to our democracy. We hope that USAFacts will make a modest contribution toward building consensus and finding solutions.

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States Weigh the Price of Financial Incentives for Business Development

Source: Lisa Mckinney, Capitol Ideas, Vol. 60, No. 2, March 2017

Financial incentives for economic development are intended to motivate a business to locate or relocate in a specific state, expand their facilities or create more jobs. GASB 77 is reflective of a shift in state legislatures to more closely track the efficacy and return on investment of tax abatements and other financial incentives for economic development.

2016 Annual Survey of State Government Tax Collections

Source: U.S. Census Bureau, Tip Sheet, Release Number: CB17-TPS.37, April 18, 2017

The 2016 Annual Survey of State Government Tax Collections provides a comprehensive look at state governments and contains statistics on the tax collections of all state governments, including receipts from compulsory fees. State governments and businesses have been using these statistics to make policy and investment decisions since 1951.

These statistics do not include employer and employee assessments for retirement and social insurance purposes. Also excluded are collections for the unemployment compensation taxes imposed by each of the state governments. These statistics include tax collections for state governments only; they do not include tax collections from local governments.
2016 Annual Survey of State Government Tax Collections Detailed Table [XLS,67KB]
2016 Annual Survey of State Government Tax Collections by Category Table [XLS,27KB]

Selected Major State Sales Taxes

The Impact of Fiscal Limits on State Revenue Volatility

Source: Tucker Staley, American Review of Public Administration, Vol 47, Issue 4, May 2017
(subscription required)

From the abstract:
Recent headlines suggest that state revenue volatility has important consequences regarding public administration and the choices state governments make. This work explores the connection between fiscal limits—specifically, tax and expenditure limitations (TELs), balanced-budget rules (BBRs), and super-majority voting requirements (SMRs)—and state revenue volatility. While growth is the most common measure for judging the impact of fiscal constraints, there is a growing literature that argues that volatility, or risk, of state revenue streams is equally important. This work looks at 48 states (Alaska and Nebraska are dropped) over a 37-year period (1969-2005) to assess how fiscal constraints are associated with the volatility of state revenue streams. The evidence suggests that states with strict BBRs and SMRs tend to have lower levels of revenue volatility, while strict TELs tend to be associated with higher levels of revenue volatility. However, given that states often have adopted more than one of these limits, the evidence suggests that strong BBRs have a very strong moderating effect on the impact of TELs. States with super-majority rules tend to start at lower levels of volatility; however, they have little influence on the impact of the other limits.

Sales Tax Competition among State–Local Governments: Evidence from the US Counties

Source: Jongmin Shon, International Journal of Public Administration, Latest Articles, Published online: 27 Mar 2017
(subscription required)

From the abstract:
This article estimates tax reaction function of local governments competing with other governments to provide the insight for tax policy decision makers. Employing a panel of county-level data in all the states from 1970 to 2006, this article analyzes sales tax competition between county governments. In addition to a static model, this article pays more attention to dynamics in tax reaction function estimated by general methods of moments containing lagged dependent variables in the reaction function. Focusing on county governments, this article finds evidence for strategic interaction, an interaction that has positive effects on the setting of tax rates in a county.

Taxing Wages 2017

Source: Organisation for Economic Cooperation and Development (OECD), April 11, 2017

From the abstract:
This annual flagship publication provides details of taxes paid on wages in OECD countries. It covers personal income taxes and social security contributions paid by employees, social security contributions and payroll taxes paid by employers, and cash benefits received by in-work families. It illustrates how these taxes and benefits are calculated in each member country and examines how they impact household incomes. The results also enable quantitative cross-country comparisons of labour cost levels and the overall tax and benefit position of single persons and families on different levels of earnings. The publication shows average and marginal effective tax rates on labour costs for eight different household types, which vary by income level and household composition (single persons, single parents, one or two earner couples with or without children). The average tax rates measure the part of gross wage earnings or labour costs taken in tax and social security contributions, both before and after cash benefits, and the marginal tax rates the part of a small increase of gross earnings or labour costs that is paid in these levies.
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Federal Tax Returns: Latest Rankings by County, State and More

Source: Transactional Records Access Clearinghouse (TRAC), Report date: April 11, 2017

For many years, the county with the highest adjusted gross income per federal tax return payer was found in glossy locations such as Teton County, Wyoming, Fairfield County, Connecticut and New York Country, N.Y. But for the latest available tax year – returns filed during 2015 — the top ranking county in the nation according to this count has moved south, to McMullen County, Texas, where its best known feature is Boot Hill Cemetery in Tilden.

Though ranked among smallest of the nation’s 3,000 plus counties in terms of total population, when examined by another factor — the average adjusted gross income of the taxpayers in this very sparsely populated county easily tops the better known spots mentioned above as well as Falls Church City, Virginia, Marin County (Point Reyes Station), California and Pitkin County (Aspen, Colorado).

(Boot Hill Cemetery, established about 1858, gained its name because many of the interred reportedly were buried with “their boots on.”)

TRAC has updated its interactive Taxpayer Returns application with the latest data available from the Internal Revenue Service (IRS). This unique tool makes it easy to browse through TRAC’s extensive store of information on the constantly shifting types of income going back to 1991 that flow to taxpayers in the fifty states and every one of the more than 3,000 counties.

Average wages and salaries continue to grow more slowly that total income from all sources. While average reported wages and salaries grew by 3.5 percent on returns filed in 2015 as compared with those filed the previous year, the average adjusted grow income (AGI) grew by 6.3 percent. Overtime, the proportion of reported income from wages and salaries has slipped. For returns filed during 2015 wages and salaries made up only 69 percent of reported AGI. For 2014 it was 71 percent. Ten years ago it was 73 percent, while twenty years ago wages and salaries made up 77 percent.

Fewer than two exemptions (1.95) are now being claimed on average on a return – down from over two (2.16) a decade ago. ….

The Short-term Effects of the Kansas Income Tax Cuts on Employment Growth

Source: Tracy M. Turner, Brandon Blagg, Public Finance Review, OnlineFirst, March 29, 2017
(subscription required)

From the abstract:
The state of Kansas made dramatic changes to the structure of its personal income tax by eliminating taxation of business income and lowering marginal tax rates on other personal income sources. Proponents of the legislation maintain that the tax reductions will stimulate employment growth. Using a difference-in-differences approach, we estimate the impact of the tax changes on private-sector employment in the state of Kansas, relative to its border states, using data on the number of establishment employees and proprietors. We apply multistate county fixed effect model and county-border matching approaches to identify tax effects. Our findings indicate that two years post enactment, the tax law changes have not yielded a net increase in private-sector employment.

In Search of Rural Jobs, States Weigh Strategy With Checkered Past

Source: Jen Fifield, Stateline, March 30, 2017

In rural communities across the country, jobs are disappearing and people are moving away, driving a desperation that helped elect Donald Trump president.

But as state lawmakers look for ways to bring life to these long-struggling areas, many are falling prey to a complex economic development approach, pushed hard by investment firms that stand to benefit, that has failed to live up to its promises.

The so-called rural jobs bills have been proposed in at least 11 states this year, and last week in Utah, Gov. Gary Herbert, a Republican, signed one into law. Under the bills, state tax credits are awarded to companies that agree to invest in or loan money to funds set up by investment firms or other brokers. The funds then invest the money in rural businesses. The proposals are the latest iteration of an approach that at least 20 states and Washington, D.C., have turned to in the last three decades.

But states that have evaluated the multilayered subsidized lending programs — originally CAPCO (certified capital companies) programs and later New Markets Tax Credit programs — have found that they failed to deliver promised jobs and tax revenue.

Three firms — Advantage Capital Partners, Enhanced Capital and Stonehenge Capital — have led the lobbying for the programs and have been the main participants in several states. ….

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