State Tax Rates and 1996 Collections

Transcription

1 Sinc e TAX FOUNDATION SPECIAL February 1998 No. 75 State Tax Rates and 1996 Collections By Scott Moody Economist Tax Foundation State tax and fee collections grew by 4.9 percent between 1995 and The growth in inflation-adjusted tax collections continues a trend that began more than a decade ag o (Figure I charts the growth over the past decade.). Table 5 reports that the three fastes t growing categories of state collections wer e death and gift taxes (8.2 percent), individual income taxes (6.9 percent), and public utilit y taxes (6.4 percent). Total 1996 state-by-stat e collections, along with the distribution by typ e of tax, are reported in Table 6. In 1996, on average, growth in persona l income outpaced the growth in state taxes. Table 7 reports that, for the nation, state ta x collections lagged behind personal income by Figure 1 Total State Tax Collections, (Billions of Dollars, Current and Constant 1986$) Current Dollars Constant Dollars ($1986 ) $45 0 $40 0 $35 0 $30 0 $25 0 $200 $150 $100 $ Source: Tax Foundation.

2 SPECIAL 2 Table I Individual Income Tax Rates (Effective for 1997) Federa l Deduct. Marginal Low High Standard Deduction Personal Exemption s Rates (a) No. o f Bracket (a ) Bracket (a ) (Percent) Brackets (Under) (Over) Single Joint Single (b) Dependent s Alabama Yes $500 $3,000 $2,000 $4,000 $1,500 $300 Alaska No None n.a. n.a. ma. ma. n.a. ma. ma. Arizona No , ,000 3,600 7,200 2,100 2,300 Arkansas No , (c) 20 (c ) California No ,016 32,916 2,583 5, (c) 68 (c ) Colorado No 5% of federal taxable income. ma. n.a. n.a. ma. Connecticut No ,250 6,250 n.a. n.a. 12,000 (e) 0 Delaware No ,000 30,000 1,300 1, (c) 100 (0 District of Columbia No ,000 20,000 2,000 2,000 1,370 1,370 Florida No None n.a. n.a. n.a. n.a. n.a. ma. ma. Georgia No ,000 2,300 3,000 1,500 2,500 Hawaii No ,500 20,500 1, ,040 1,040 Idaho No ,000 40,000 4,150 6,900 2,650 2,650 Illinois No ma. ma. ma. n.a. 1,000 1,000 Indiana No n.a. ma. ma. n.a. 1,000 1,000 Iowa Yes ,112 50,040 1,410 3, (c) 40 (c ) Kansas No ,000 30,000 3,000 5,000 2,000 2,000 Kentucky No ,000 8, (c) 20 (c ) Louisiana Yes ,000 50,000 ma. n.a. 4,500 1,000 Maine No ,250 33,000 4,150 6,900 2,150 2,150 Maryland No ,000 3,000 3,000 4,000 1,200 1,200 Massachusetts No 5.95/12.0 (f) 1 n.a. ma. ma. n.a. 2,630 1,000 Michigan No n.a. ma. n.e. n.e. 2,500 2,500 Minnesota No ,510 54,250 4,150 6,900 2,650 2,650 Mississippi No ,000 10,000 2,300 3,400 6,000 1,500 Missouri Yes ,000 9,000 4,150 6,900 1, Montana Yes ,900 67,900 2,910 5,820 1,550 1,550 Nebraska No ,000 23,375 4,150 6, (c) 86 (c) Nevada No None n.a. n.a. n.a. n.a. n.a. ma. n.a. New Hampshire No 5.0 (h) n.a. ma. n.a. n.a. n.a. n.a. n.a. New Jersey No , ma. ma. 1,000 1,500 New Mexico No ,000 50,000 4,150 6,900 2,650 2,650 New York No ,000 20,000 7,500 13, ,000 North Carolina No ,750 60,000 4,150 6,900 2,650 2,650 North Dakota Yes (d) 14% of federal income tax liability. n.a. n.a. n.a. Ohio No , ,000 n.a. n.a. 850 (g) 1,050 (g ) Oklahoma Yes (d) ,000 10,000 2,000 2,000 1,000 1,00 0 Oregon Yes ,200 5,550 1,800 3, (c) 128 (c ) Pennsylvania No n.a. n.a. ma. ma. n.a. n.a. Rhode Island No 27.5% of federal income tax liability. n.a. n.a. n.a. South Carolina No ,280 11,400 4,150 6,900 2,650 2,65 0 South Dakota No None n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tennessee No 6.0 (h) n.a. ma. n.e. ma. ma. ma. ma. Texas No None n.a. n.a. n.a. n.a. n.a. n.a. n.a. Utah Yes ,150 6,900 1,988 1,988 Vermont No 25% of federal income tax liability. n.a. n.a. n.a. Virginia No ,000 17,000 3,000 5, Washington No None n.a. n.a. n.a. n.a. ma. ma. n.a. West Virginia No ,000 (i) 60,000 (i) n.a. n.a. 2,000 2,00 0 Wisconsin No ,500 (j) 15,000 (j) 5,200 (k) 8,900 (k) Wyoming No None n.a. n.a. n.a. n.a. ma. n.a. n.a. Note : Bold, Italics indicate notable tax changes. (a) Applies to single taxpayers and married people filing seperately. (b) Except for Delaware,Michigan, and Michigan, married-joint filers receive double the single exemption. Delaware is a flat $100 tax credit, Michigan i s $3,000 for joint, and Mississippi is $9,500 for joint. (c) Tax Credit. (d) Rates listed assume that taxpayers opt not to deduct their federal income tax liability. In North Dakota, a filer who chooses to deduct his federa l liability faces a range of rates from 2.67%42% on income up to $3,000 and over $50,000, respectively. In Oklahoma, if a filer chooses to deduct his federal liability, then he faces a range of rates from 0.5%-1(1% on income up to $1,000 and over $16,000 respectively. (e) Taxpayers receive a declining tax credit instead of a deduction or exemption. For Connecticut, the credit is 75% of tax liability starting at $14,000 o f taxable income and declines to 0% after $52,500. (0 The 12% rate applies to interest, dividends and capital gains. (g) Taxpayers receive a $20 tax credit per exemption in addition to the normal exemption amount. (h) Applies to interest and dividend income only. (i) For married, filing separately, the low bracket is $5,000 and the high bracket is $30,000. (j) For married, filing separately, the low bracket is $5,000 and the high bracket is $10,000. Source : Respective state tax forms and instructions, Commerce Clearing House, Federation of Tax Administrators.

3 SPECIAL 3 Table 2 Corporate Income Tax Rates (Effective for 1997) Rates No. o f Brackets Low Bracket Hig h Bracke t Special Rates or Note s Alabama 5.0 n.a. n.a. Alaska $10,000. $90,000. Arizona 9.0 n.a. n.a. Arkansas , ,00 0 California 8.84 n.a. n.a. Colorado 5.0 n.a. n.a. Connecticut 10.5 n.a. n.a. Delaware 8.7 n.a. n.a. District of Columbia 9.5 n.a. n.a. Florida 5.5 n.a. n.a. Georgia 6.0 n.a. n.a. Hawaii , ,00 0 Idaho 8.0 n.a. n.a. Illinois 4.8 n.a. n.a. Indiana 3.4 n.a. n.a. Iowa , ,00 0 Kansas 4.0 n.a. n.a. Kentucky , ,00 0 Louisiana , ,00 0 Maine , ,00 0 Maryland 7.0 n.a. n.a. Massachusetts 9.5 n.a. n.a. Michigan ,000 45,00 0 Minnesota 9.8 n.a. n.a. Mississippi ,000 10,00 0 Missouri 6.25 n.a. n.a. Montana 6.75 n.a. n.a. Nebraska ,000 50,00 0 Nevada None n.a. n.a. n.a. New Hampshire 7.0 n.a. n.a. New Jersey 9.0 n.a. n.a. New Mexico ,000 1,000,00 0 New York 9.0 n.a. n.a. North Carolina 7.5 n.a. n.a. North Dakota ,000 50,00 0 Ohio ,000 50,00 0 Oklahoma 6 n.a. n.a. Oregon 6.6 n.a. n.a. Pennsylvania 9.99 n.a. n.a. Rhode Island 9.0 n.a. n.a. South Carolina 5.0 n.a. n.a. South Dakota None n.a. n.a. n.a. Tennessee 6.0 n.a. n.a. Texas None n.a. n.a. n.a. Utah 5.0 n.a. n.a. Vermont , ,00 0 Virginia 6.0 n.a. n.a. Washington None n.a. n.a. n.a. West Virginia 9.0 n.a. n.a. Wisconsin 7.9 n.a. n.a. Wyoming None n.a. n.a. n.a. 6% on financial institutions ; Federal deductability. Corps. with net incomes exceeding $100,000, 6.5% of entire net income % on financial institutions ; 6.65% alternative minimum tax rate. Tax rate scheduled to fall to 9.5% in 1998, 8.5% in 1999, and 7.5% after Plus 5% surta x 3.3% alternative minimum rate. 4% capital gains rate, 7.92% on financial institutions. 2.5% income replacement tax. 4.5% on supplemental income. 5% on financial institutions ; 7.2%alternative minimum rate ; 50 % federal deductability. 3.35% surtax over $50,000 ; Banks 4.25% plus 2.125% surtax over $25,000. Federal deductability. 27% of federal alternative minimum tax liability. Franchise tax built into rate (.26% per $1,000 of income) ; 11.32% o n financial institutions. Modified VAT. Rate applies to gross receipts. Must file only with gros s receipts over $250,000. $45,000 deductible. 5.8% alternative minimum tax rate. 7% on financial instituition ; 50% of federal tax deductible. 4.7% surtax rate. Must file business profits tax only with gross receipts over $50,000. Businesses with over $100,000 in gross receipts or wages, interest, an d dividends over $50,000 are subject to 0.25% business enterprise tax o n total value of wages, interest, and dividends. Such business' BPT liability i s reduced by sum of BET liability. 2.5% surtax rate. Tax rate scheduled to fall to 7.25% in 1998, 7.0% in 1999, and 6.9% after % for financial institutions plus 2% surtax rate ; Federal deductability. For financial institutions, times value of stock. Includes 0.49% surtax, which is being phased out through Imposes a "Capital Stock and Franchise Tax. " 4.5% for banks ; 6% for savings and loans. 6% on a bank's net income. Gross receipts tax. The 20 different rates range from 0.011% % depending on the type of business activity. 5.5% surtax rate. Note : Bold, Italics indicate notable tax changes. Source : Respective state tax forms and instructions, Commerce Clearing House, Federation of 'tax Administrators.

4 SPECIAL 4 Table 3 Various Tax Rates (State-level only, 1997) General Sale s and Use Tax Gasolin e Ta x (Cents pe r Gallon) Cigarett e Tax (Cents pe r 20-pack) Spirits Tax (Dollars pe r Gallon) Tabl e Wine Ta x (Dollars pe r Gallon) Beer Tax (Dollars pe r Gallon ) Alabama 4% % (b) $.05/1.70 (c) $0.5 3 Alaska None 8 29 $ Arizona Arkansas California Colorado /.32 (c) (d) Connecticut Delaware None District of Columbia Florida Georgia Hawaii Idaho (b) Illinois Indiana Iowa (b) Kansas Kentucky Louisiana Maine (b) Maryland Massachusetts Michigan % (b) Minnesota Mississippi (b) Missouri Montana None % (b) Nebraska (a) Nevada New Hampshire None (b) New Jersey New Mexico New York North Carolina (a) 5 28% (b) 0.79 (f ) North Dakota Ohio (b) Oklahoma Oregon None (b) Pennsylvania % (b) (e) Rhode Island South Carolina (g) 1.28 (g) 0.77 (g ) South Dakota Tennessee Texas Utah % (b) 13% (b) Vermont % (b) Virginia % (b) Washington % (b) (h ) West Virginia %(b) Wisconsin (a) Wyoming (b) (b) 0.02 Note : Bold, Italics indicate notable tax changes. (a) Indexed for inflation. Nebraska's indexed rate is revised quarterly. North Carolina's indexed rate is revised every six months. Wisconsin's indexed rate is revised every April 1. (b) Control states. (c) Rates represent native wine/non-native wine. (d) Effective July 31, 1997, the annual surcharge for native wine will use an annual graduated rate : 5 cents per liter for the first 9,000 liters, 3 cents pe r liter for the next 36,000 liters, and I cent per liter for all additional amounts. (e) 0.5 cents per unit of proof per wine gallon. (f) per gallon in barrels holding at least 7.75 gallons per gallon in barrels holding less than 7.75 gallons. (g) 9% surtax. (h) Plus $4.78 per barrel beginning July I, Source : Respective State Revenue Departments, Commerce Clearing House, Federation of Tax Administrators.

5 SPECIAL Table 4 State Tax Collections Per Capita and Per $1,000 of Personal Income an d Corresponding Ranks Fiscal Year 1996 Total ($Millions) Pe r Capita Per $1,00 0 Persona l Income Pe r Capita Ran k Per $1,00 0 Persona l Incom e Alabama $5,257.8 $1,230 $ Alaska 1, , Arizona 6, , Arkansas 3, , California 57, , Colorado 4, , Connecticut 7, , Delaware 1, , District of Columbia 2, , Florida 19, , Georgia 10, , Hawaii 3, , Idaho 1, , Illinois 17, , Indiana 8, , Iowa 4, , Kansas 3, , Kentucky 6, , Louisiana 4, , Maine 1, , Maryland 8, , Massachusetts 12, , Michigan 19, , Minnesota 10, , Mississippi 3, , Missouri 7, , Montana 1, , Nebraska 2, , Nevada 2, , New Hampshire New Jersey 14, , New Mexico 3, , New York 34, , North Carolina 11, , North Dakota , Ohio 15, , Oklahoma 4, , Oregon 4, , Pennsylvania 18, , Rhode Island 1, , South Carolina 5, , South Dakota Tennessee 6, , Texas 21, , Utah 2, , Vermont , Virginia 8, , Washington 10, , West Virginia 2, , Wisconsin 9, , Wyoming , All States (a) $418,606.1 $1,581 $64.79 (a) Does not include the District of Columbia. Source : Tax Foundation, based on data from the Department of Commerce, Bureau of th e Census and Bureau of Economic Analysis percent. That growth rate compares with an inflation-adjusted decade-long average of 0.32 percent. However, the growth rate of state tax collections relative to personal income growth varies substantially from state to state. From 1995 to 1996, the five states that had th e highest tax growth relative to personal incom e growth were Hawaii, Arkansas, Michigan, New Mexico, and California. The fives states tha t had the highest personal income growth relative to tax growth were Alaska, New Hampshire, Wyoming, North Dakota, an d Iowa. The growth of taxes relative to incom e does not necessarily correlate with the overal l tax burden of the state. For example, in 1996, Alaska had the highest tax burden per $1,00 0 of personal income, yet it recorded the larges t drop in tax growth relative to personal incom e between 1995 and 1996, as Tables 4 and 7 report. Even over the last ten years, Alask a had the second slowest tax growth. Such an anomaly occurs in a state like Alaska because i t enjoys enormous tax inflow from oi l production, making it a unique case. (If Washington, D.C., were a state, it would hav e the highest ranking tax burden). Table 4 also shows that variou s measurements of the tax burden can differ substantially. For example, Mississippi and New Jersey show an almost equally large disparity between their "per capita" and "pe r $1,000 of personal income" rankings, but in opposite directions. This disparity can b e explained by the relative per capita incom e levels of the two states (Per capita income i n Mississippi is about 56 percent of that in Ne w Jersey, and the state tax system is more progressive than that in New Jersey). Mississippi is ranked 35th in terms of ta x burden per capita, but is ranked 9th in term s of tax burden per $1,000 of personal income. New Jersey is ranked 14th in per capita tax burden, but 42nd in terms of tax burden pe r $1,000 of personal income. Income Tax Rate Changes Table 1 reports elements of different states' individual income tax laws. Table 2 reports elements of different states' corporat e income tax laws. Ten states enacted legislation for 1997 tha t alters individual income tax laws via change s in rates, deductions, exemptions and ta x credits. Four of these ten states changed som e or all of their individual income tax rates : Delaware, Kansas, Nebraska, and New York. Delaware reduced tax rates in each of its seve n

6 SPECIAL 6 Table 5 State Government Tax Collections by Type ($Billions ) Fiscal Years Type of Tax/Year Averag e Annua l Growt h Rat e Growt h Rat e General Sales $74.9 $79.2 $87.1 $93.5 $99.9 $103.2 $108.7 $114.9 $123.3 $132.2 $ % 5.3% Individual Income Corporate Income Motor Fuels Licenses Insurance Public Utilities Property Tobacco Severance Death and Gift Alcohol All Other Total State Taxes $228.3 $246.3 $264.1 $284.4 $300.7 $311.1 $331.2 $354.3 $373.8 $399.2 $ % 4.9 % Annual % Change 5.7% 7.9% 7.2% % 3.5% 6.4% 6.97% % 4.9 % Total State Taxe s (Constant 1986 $) $228.3 $238.9 $247.3 $255.6 $259.0 $257.7 $266.9 $278.3 $287.2 $299.0 $ % 2.9 % Annual / Change 2.8% 4.6% 3.5% 3.4% 1.3% -0.5% 3.6% 4.3% 3.2% 4.1% 2.9% Note : Does not include the District of Columbia. Source : Tax Foundation, based on data from the Department of Commerce, Bureau of Census. brackets. The top rate was reduced from 7. 1 to 6.9 percent. The bottom rate was reduce d from 3.2 to 0 percent. Kansas lowered their bottom rate from 4.4 to 4.1 percent. Nebraska reduced tax rates in each of its four brackets. The top rate was reduced from 6.99 to 6.68 percent. The bottom rate was reduced fro m 2.62 to 2.51 percent. New York lowered all rates except for the lowest bracket. The top rate was reduced from 7 to 6.85 percent. Three states also changed their corporat e income tax rate : Connecticut, North Carolina, and Vermont. Connecticut reduced its singl e rate from to 10.5 percent. Thei r corporate rate is scheduled to fall to 9. 5 percent in 1998, 8.5 percent in 1999, and 7. 5 percent after North Carolina reduced it s single rate from 7.75 percent to 7.5 percent. Their corporate rate is scheduled to fall to percent in 1998, 7.0 percent in 1999, and 6.9 percent after Vermont increased their corporate tax in each of their 4 brackets. The top bracket rose from 8.25 to 9.75 percent. The bottom bracket rose from 5.5 to 7.0 percent. Other Tax Rate Changes Table 3 lists, state-by-state, sales tax rates, gasoline tax rates, cigarette tax rates, and tax rates on liquor, wine and beer. Many states enacted specific changes to their sales and use tax, but only three states - Arkansas, Minnesota, and Utah-changed thei r basic sales tax rate. Arkansas increased its rate from 4.5 to percent. Minnesota increased its rate from 6 to 6.5 percent. Utah lowered its rate from to 4.75 percent. Michigan, South Dakota, Utah, an d Vermont all increased their gasoline tax rates : Michigan's rose from 15 to 19 cents, Sout h Dakota's rose from 18 to 21 cents, Utah's ros e from 19.5 to 24.5 cents, and Vermont's ros e from 15 to 19 cents per gallon. Connecticu t and Missouri decreased their rates from 38 and 17 cents to 36 and 15 cents per gallon respectively. Eight states changed their cigarette tax rates: Hawaii, Indiana, Maine, Massachusetts, New Hampshire, Oregon, Utah, and Washington. Hawaii increased its rate from 60 to 80 cents per pack; Indiana from 15.5 to 3 1 cents per pack; Maine from 37 to 74 cents pe r pack; Massachusetts from 51 to 76 cents pe r pack; New Hampshire from 25 to 37 cents per pack; Oregon from 38 to 68 cents per pack ; Utah from 26.5 to 51.5 cents per pack ; and Washington from 81.5 to 82.5 cents per pack.

7 SPECIAL 7 Fable 6 State Tax Collections and Distribution by Sourc e Fiscal Year 1996 Tota l ($Millions) Genera l Sales & Use Individua l Income Distributio n Corporat e Income Moto r Fuels Licenses Al l Othe r Alabama $5, % 30.0% 4.1% 8.8% 8.0% 21.6 % Alaska 1, Arizona 6, Arkansas 3, California 57, Colorado 4, Connecticut 7, Delaware 1, District of Columbia 2, Florida 19, Georgia 10, Hawaii 3, Idaho 1, Illinois 17, Indiana 8, Iowa 4, Kansas 3, Kentucky 6, Louisiana 4, Maine 1, Maryland 8, Massachusetts 12, Michigan 19, Minnesota 10, Mississippi 3, Missouri 7, Montana 1, Nebraska 2, Nevada 2, New Hampshire New Jersey 14, New Mexico 3, New York 34, North Carolina 11, North Dakota Ohio 15, Oklahoma 4, Oregon 4, Pennsylvania 18, Rhode Island 1, South Carolina 5, South Dakota Tennessee 6, Texas 21, Utah 2, Vermont Virginia 8, Washington 10, West Virginia 2, Wisconsin 9, Wyoming All States (a) 418, (a) Does not include the District of Columbia. Source : Tax Foundation, based on data from the Department of Commerce, Bureau of the Census.

8 SPECIAL 8 Table 7 State Tax Growth Compared to Personal Income (PI) Growth, by Stat e Fiscal Years SPECIAL REPOR T (ISSN ) is published at least 10 times yearly by the Tax Foundation, an independen t 501(c)(3) organization chartered in the District of Columbia pp. Annual subscription: $ Individual issues $5. The Tax Foundation, a nonprofit, nonpartisa n research and public education organization, has monitored tax and fiscal activities at all levels of government since Tax Foundatio n Editor and Communications Director, Stephen Gold Tax Foundation, 1250 H Street, NW, Suite 75 0 Washington, DC (202) http.//wwwlaxfoundation.org taxfnd@in tr. net Avg. Annual Tax Growt h (Real 1986 $) Avg. Annua l PI Growt h (Real 1986 $) Avg. Annua l Growth o f Taxes Relative to P I (Real 1986 $) (a) Tax Growt h Ran k Growth of Taxes Relativ e to P I (Current $) (a) Ta x Growt h Ran k Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming All States (b) 3.03% 2.70% 0.32% -0.70% (a) If tax growth exceeds income growth, the relationship will he positive. If income growth exceeds tax growth, the relationship will be negative. (b) Does not include the District of Columbia. Source : Tax Foundation, based on data from the Department of Commerce, Bureau of the Census and Bureau o f Economic Analysis.