The state of state and local taxes

By Cate Long
April 11, 2012

In addition to federal taxes, Americans are responsible for paying state and local sales, personal income and property taxes, and a variety of fees for the use of their cars, sewer systems and water systems. Although approximately 47 percent of the population pays no federal income tax, those people do contribute to public safety, education and welfare through their state and local taxes (and, it should be noted, also pay federal payroll taxes). Across the nation, sales taxes bring in about one-third of state revenues, personal income tax revenues bring in another third, and a variety of other taxes and fees make up the balance.

Rarely do you hear cries from the citizenry to have their taxes raised – usually you hear people lament that rates are too high. A recent Bloomberg slideshow listed aggregate tax rates by state but used data that did not include local tax rates. Many of the 1,256 comments on the slideshow pointed out that the information was wrong. In almost every comment that I read, people thought that their taxes were too high.

The response of state governments to their citizens’ cries for lower taxes has been ambivalent. While states decreased their sales taxes by $5.2 billion for 2012, they also increased personal income taxes by $3 billion, according to a National Conference of State Legislatures poll. There is a lot of variance among states in sales tax rates, though: Five states collect no state sales tax, and 13 states have an average local sales tax rate of zero. State and local governments are looking for additional revenue from every available source, but I predict that we will mainly see increases in income taxes for higher earners rather than increases to sales tax rates.

11 comments

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it looks like it is not the rich who does not pay taxes… half of 99% of losers do not pay tax… vowww…

Posted by Ocala123456789 | Report as abusive

Most states aren’t collecting enough taxes to fund their schools and services as it is. I see every giant full-size pickup, camper, boat, jetski, 5,000 square foot house, and many other “Middle Class” toys as representing one family that should be paying higher taxes. Don’t even get me started on cruises and tropical vacations. We as a society are indirectly subsidizing the purchase of toys, giant cars, and vacations people don’t need while our schools suffer and poor people can’t get health care. Is it really too much to ask people to sacrifice some square footage and personal possessions so we can all live better? We’ve got an awful lot of kids who can’t get the help they need, meanwhile far more than just the 1 percent are living lives of profligate waste and excess.

Posted by josefski | Report as abusive

How on God’s green earth can 47% of the people get away with paying on Federal income tax. Unbelievable. I have paid it since I was 19 and I am 62. a few of those I only made around $3,00.. a year as I was laid off or went back to school but still I had to pay my taxes every single year. If we had a progressive flat tax with no exemptions, no deductions, no tax credits, no loopholes of any kind and all income was taxed as income tax, then 100% of the people would be paying the Federal income tax. Proof the current tax system is just a form of welfare for the rich and the poor.

Posted by JLWR | Report as abusive

I think everyone knows the answer to our economic problem is to raise taxes for everyone not only the rich because if we were to hit another great depression again the ones complaining would be the same ones complaining about high tax rates.

Posted by jmhh | Report as abusive

josefski are you serious???????? You want to penalize those who have EARNED their way to enjoy a fruitful life? Here is a fact. Communism didn’t work in the USSR. Why do you propose it here?

Posted by frd197 | Report as abusive

@josefski

I am single with no kids. I pay considerably more taxes than a family of 4 who makes my income. But this is the catch, I use much less of the public services than this family of four. My choice to not have kids should give me tax credits, not the choice of people to have kids and use more services. You take more money from me, who has about as small of a footprint on this planet as you can get, to give to someone else who is using up 4 times as much resources. Our tax system is backwards.

Posted by UnPartisan | Report as abusive

Oregon does not have a sales tax but does have an income tax. I don’t mind because I’m sure that my income tax is less than a sales tax I would have had were I living in California, Arizona, Texas, etc. I wish there were a different structure of the auto/truck registration tax because certain counties have lower taxes and trucks are registered there an drive on roads and ruin them and don’t pay any registration or road tax. Overall, Oregon does not have a bad tax rate all things considered. I pay under $2 k for my property tax. We had half the home NOT overlooking the ocean (white water) and paid double in California.

Posted by neahkahnie | Report as abusive

@jwlr – “How on God’s green earth can 47% of the people get away with paying on Federal income tax.”

Well count yourself lucky that you have taxable income. That means you have income. Many unemployed people (no income) still have to pay property taxes, licensing taxes, sales taxes, etc out of their savings. Many earn an income, but are still so far below the poverty level that no federal tax is due. Then there are the retirees living off savings and social security (of which you may soon be one of). They still pay all of those taxes I listed.

You missed the article. Federal Income tax is only a piece of the picture. We need Total Tax reform. By ‘total’ I mean comprehensive.

Posted by SeaWa | Report as abusive

@Unpartisan – Well, you know that Social Security and Medicare are ‘pay as you go’ programs. Your future benefit is not funded by a savings strategy. The government funds todays benefits from taxes collected today. Tomorrows benefits will be funded from tomorrows taxes. So forth, and so on. Those ‘kids’ you do not want to subsidize will be subsidizing your social security and medicare when you are retired and they are working. You should help them get educated with good jobs so they can pay even more toward your monthly benefit when you retire.

Thank you to the Americans that have sacrificed some of your lives raising kids! Thank you!

Posted by SeaWa | Report as abusive

@jwlr. The situation is that we have federalism. Written into the Constitution. Has always been this way. I would rather have a bad tax picture at the local level that have the Federales tell me what to do, when to blow my nose, how to construct my house, what my grandkids need to learn in a state that is 3000 miles away from the beltway. Not perfect, granted but better than a government which has absolute power over everything like China or Russia, God forbid.

Posted by neahkahnie | Report as abusive

With the statement of not paying any income tax, if you look at the chart on the link, one of the pie charts kind of clarifies it. It will show no income tax, but payroll taxes. I can’t speak for all states, but I do know in most states if you make under a certain amount every pay period, no matter what you claim there just isn’t enough there to tag with taxes. They will take SS taxes and others, but there isn’t enough to take income tax. So I believe that is what the author is referring to. He isn’t saying people are skipping out on paying or anything else.
My wife is lucky enough to be able to work part time, but even at 20-25 hours a week, it isn’t enough to get taxes taken out.

And with states and sales tax, here in Colorado you have a base sales tax, but then each city can have their own city tax. So depending on where you shop you will find that you end up paying a different rate. It’s hard to say what you pay. But the bottom line, is I don’t like paying taxes anymore than the next person, but the items we require aren’t going to be paid for by anyone else. I do get tired of hearing people say that they want the federal government out of their lives, but are happy as hell when they want the money they hand out to the states. I don’t know of very many states that refuse money for roads or anything else. But then you’ll hear them scream to leave them alone. Funny how people want it both ways.

So taxes are going to be around. We are going to have to raise them one way or another. It doesn’t matter what we cut out of the budget or reduce spending on, that will only last so long. Even the government has to pay going rates. So if money coming in doesn’t keep up, we’ll be back into trouble. There isn’t a republican, democrat or independent that doesn’t know that. They just won’t say it in an election year, and when they do say it, it will always be the other guys idea no matter who has the idea

Posted by Shays1960 | Report as abusive