Category Archives: Taxation

The U.S. Income Tax Burden, County by County

Source: Benjamin H. Harris, Brookings Institution, December 13, 2013

…The map presents variation in income tax burdens—measured in absolute dollars and as a share of income—for each county in the United States. (Data are from 2007, the most recent data available for this type of analysis.) The variation—due in large part due to differences in incomes—is stark. In absolute dollars, the average tax burden across counties is $3,419, but some counties’ average tax burden is substantially more and some counties’ burden is substantially less. Ten percent of counties have average tax bills of $2,102 or less, while ten percent of counties had average tax bills of $6,745 or more. As a share of income, the lowest 10 percent of counties had average tax bills under 7.4 percent of income while the top 10 percent of counties had average tax bills in excess of 11.7 percent of income. (Income is measured as “adjusted gross income,” a tax-related term that refers to total income less adjustments that are mostly related to the cost of earning income.)

In general, counties with higher income tax burdens—due in large part to higher incomes—tend to be clustered around large cities. For example, most counties in Illinois have low average federal income tax burdens, with the exception of those counties surrounding Chicago. In addition, Texas counties close to Dallas, Houston, and San Antonio generally have higher tax federal income tax burdens relative to those counties farther from a major city. Counties located on the California coast, in southern Florida, and within the corridor between Washington DC and Boston also tend to have higher federal income tax burdens. In addition, some counties that host popular ski resorts—such as Pitkin County, CO (which contains the city of Aspen) and Teton County, WY (which contains Jackson Hole)—also have notably high income tax burdens. …

Over the next several weeks we plan to release additional maps showing the geographic distribution of other tax characteristics, including rates of Earned Income Tax Credit participation, rates of itemized deduction claiming, and share of taxpayers subject to the Alternative Minimum Tax.
See also:
Map: Income Taxes in Your County

State Tax Revenue Growth Slows Sharply in the Third Quarter of 2013 as Atypical Factors That Propped Up Prior Growth Fade

Source: Lucy Dadayan and Donald Boyd, Nelson A. Rockefeller Institute of Government, Special State Revenue Report No. 94, December 19, 2013

• State tax revenue growth slowed sharply in the third quarter of 2013. Year-over-year growth was 6.1 percent, based on preliminary data from the Rockefeller Institute, compared with second quarter growth of 9.0 percent and first-quarter growth of 8.6 percent. This is consistent with our prior analysis, which explained that atypical factors had driven growth up in those earlier quarters.
• Personal income tax revenue growth slowed to 5.3 percent on a year-over-year basis, down from 18.4 percent growth in each of the two previous quarters, and 10.8 percent growth in the fourth quarter of 2012. Withholding taxes on wages were up by 4.4 percent and payments of estimated taxes were up by 11.5 percent. Thirty-five states reported increases in personal income tax collections.
• Sales tax collections increased by 5.6 percent, in line with the prior two quarters, and corporate tax collections rose by 1.9 percent.
• We do not believe the slowdown in tax revenue growth presages a new slowing in the economy. Rather, temporary factors related to federal tax changes that had propped up personal income tax growth in prior quarters have faded away. Tax revenue growth now appears more consistent with continuing modest growth in the economy.
• This is the 15th consecutive quarter that states have reported growth in tax collections on a year-over-year basis.
• Forty-one of 47 early-reporting states reported gains in overall tax collections, while six saw declines.

The Price of Kansas’ Costly Tax Cuts

Source: Michael Leachman, Center on Budget and Policy Priorities, Off the Charts Blog, September 26, 2013

No state did more to cut taxes in 2012 than Kansas, and no governor proclaimed as loudly as Kansas’ Sam Brownback that tax cuts would have minimal negative impact on public services. So it’s worth looking at what our recent 50-state report on state K-12 funding trends found about Kansas:

– In fiscal year 2014, the first full year since Kansas’ massive income tax cuts (targeted largely to the wealthy) took effect, Kansas cut general state aid for schools per pupil by 2.6 percent (or $129). That’s the third-biggest drop in the country. Most states (35) raised general aid this year to offset some of the cuts in previous years.

– Kansas’ cut this year came on top of large earlier cuts. Since the recession hit, the state’s general aid for schools per pupil has plummeted by 16.5 percent, also the third-biggest decline in the country. That amounts to a cut of $950 per student….

Tolls may not be the answer for needed bridge repairs

Source: Michael Keating, Government Product News, December 18, 2013

…Highway departments are looking to tolls for funding to pay for bridge repairs and upgrades. Some 42 states and the District of Columbia now have some form of tolling authority, agency or facility, says the Denver and Washington–based National Conference of State Legislatures, and many of the agencies are boosting tolls.

A group of transit advocates is pushing a comprehensive plan to toll New York City’s bridges through congestion pricing. Revenue created would go toward maintenance of the city’s bridges as well as funding for the Metropolitan Transportation Authority (MTA)….

…In the second part of GPN’s series on deteriorating bridges, David Zahn of FuelQuest explores how new tax collection procedures could lead to improved bridge maintenance.

In this video, the Massachusetts Dept. of Transportation explains how it speeded the repair and replacement of 14 deteriorating bridges in that state. Much of the work was done on weekends, to reduce congestion and inconvenience for motorists….

The Best and Worst of State Tax Administration – COST Scorecard On Tax Appeals & Procedural Requirements

Source: Douglas L. Lindholm, Ferdinand S. Hogroian, Fredrick J. Nicely, Council On State Taxation (COST), December 2013

From the summary:
The Council On State Taxation (COST) is pleased to release its updated Scorecard on state tax appeals processes and administrative practices. This fifth Administrative Scorecard continues to apply objective criteria to evaluate independence in tax appeals systems and key procedural elements that impact taxpayers’ perceptions of fairness and efficiency.

This issue of the Scorecard features an “Awards & Demerits” section highlighting key improvements, continuing deficiencies, and new issues since the last edition of the Scorecard in 2010. The intent of the Scorecard is to provide a roadmap to states in establishing a legal structure that promotes fair and efficient tax administration, a benefit to both the state and the taxpayer.

The Distribution of Household Income and Federal Taxes, 2010

Source: Edward Harris, Congressional Budget Office, December 2013

From the summary:
The increase in the nation’s economic activity in 2010 affected households’ income, federal tax liabilities, and federal tax rates. In this report, CBO presents its estimates of the distribution of household income and federal taxes in 2010, and it compares those estimates with estimates for the preceding three decades. The report also discusses the effects of changes in tax rules on the distribution of federal taxes in 2013.

The Great Corporate Tax Shift

Source: Jack Rasmus, Z Magazine, Volume 26, Number 12, December 2013
(subscription required)

Doubling corporate profits

See also:
The Great Corporate Tax Shift: Part 1
Source: Jack Rasmus, Talking Union blog, November 29, 2013

The Great Corporate Tax Shift Part 2: The Check-the-Box Loophole

Source: Jack Rasmus, Talking Union blog, December 2, 2013

The Great Corporate Tax Shift, Part 3: Reversing the Corporate Tax ‘Race to the Bottom’
Source: Jack Rasmus, Talking Union blog, December 6, 2013

Congress Should Offset the Cost of the “Tax Extenders,” or Not Enact Them At All

Source: Citizens for Tax Justice, December 12, 2013

From the abstract:
Congress should end its practice of passing, every couple of years, a so-called “tax extenders” bill that reenacts a laundry list of tax breaks that are officially temporary and that mostly benefit corporations, without offsetting the cost. This report explains that none of the tax extenders can be said to help Americans so much that they should be enacted regardless of their impact on the budget deficit and other, more worthwhile programs.

Revenue Impact of Tax Extenders Enacted in Fiscal Cliff Deal, in Billions

See also:

“Road Warrior” State Income Tax Laws Vary Widely

Source: Elaine S. Povich, Stateline,org, December 12, 2013

A crazy quilt of laws governing state income taxes for “road warriors”—residents of one state who work in another—can make tax collections a nightmare. Yet states don’t necessarily favor streamlining the system under a proposed federal law.

The way it works now, states have varied standards for requiring workers to file personal income tax returns when those employees work for periods of time in a state where they don’t live. The rules also dictate how employers withhold income tax for those employees.

Some states, like New York, carefully monitor out-of-state workers; other states are less vigilant about it, according to the Council on State Taxation, a trade association for multistate corporations.

Some states have a “first day” rule, which means if you set foot in a state you don’t live in and work there for one day, you owe that state income tax. Other states have varying periods of time when the nonresident income tax kicks in, ranging from 10 days to 60 days. To complicate things further, some states do not assess the income tax on a time-worked basis; rather, they assess it on an income-earned basis starting at a floor of anywhere from $300 to $1,800 a year, according to COST.