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Breaking Down State Tax Revenues

A new Tax Foundation report by economist Gerald Prante offers a handy snapshot of state fiscal systems and their relative reliance on various sources of tax revenue.

To accompany its coverage of the report, Stateline.org used the data from the Tax Foundation report to create a useful graphic (see right) illustrating the variation in revenue sources. According to Stateline writer John Gramlich:

States that rely too heavily on one tax are vulnerable to revenue fluctuations that can be especially harmful during recessions. In Oregon, for instance, where individual income taxes account for 44.1 percent of total government tax revenue, lawmakers this year were slammed by a huge revenue decline as employment — and personal income — decreased. That has resulted in major spending cuts and is forcing some school districts to resort to four-day weeks.

Alaska, which has no statewide sales or income tax but relies heavily on natural resource taxes, also has seen a sharp revenue decline as oil prices have fallen. According to the Tax Foundation, Alaska draws a nation-high 52.6 percent of its state and local revenue from a group of taxes that includes severance taxes on natural resources, stock transfer taxes, estate taxes and fees for hunting, fishing and driver’s licenses. Other states that rely heavily on this category of taxes include Delaware (34.1 percent), Wyoming (30.1 percent), North Dakota (20.7 percent) and Montana (18.8 percent).[...]

Nationally, sales taxes account for 34.4 percent of state and local tax revenue — 23.5 percent from taxes on gasoline, cigarettes and other targeted products and services, and 10.9 percent from general sales taxes. Property taxes account for 30.1 percent, and individual income taxes account for 22.6 percent.

Leonard Gilroy is Director of Government Reform


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