Photo Credit: incamerastock / Alamy Stock Photo
With the end of the year approaching, Americans are beginning to turn their attention towards tax season. In addition to $3.3 trillion in federal taxes, last year Americans paid $950.5 billion in state taxes distributed across sales, income, property, license, and other taxes. Across all states, sales and gross receipts taxes were the largest source of state tax revenue, followed closely by income taxes; however, the breakdown of tax revenue by state varies widely.
Most Americans are aware that their pocketbooks will be affected differently depending on what part of the country they live in, but few understand just how their hard-earned dollars are converted into funds used to support state education, health care, transportation, and other public services. How states choose to collect taxes impacts both the amount that citizens have to pay every year and the primary vehicles through which they pay them.
Some states rely on income taxes as their primary method for taxing its residents, while other states impose larger sales or property taxes. U.S. Census data shows that Oregon, for example, collects just 13.4 percent of its revenues from sales and gross receipts tax, while the same tax accounts for 87.4 percent of Texas’ state collections. North Dakota extensively taxes natural resource extraction via its severance tax, accounting for nearly 44 percent of the $3.5 billion in taxes the state collected in 2017. New York, on the other hand, collected a full 61 percent of its $79.7 billion in taxes from income tax alone. Given the wide range in tax policies from state to state, it can be extremely difficult to determine how much you’d pay in total from one state to another.
To better understand the largest sources of tax revenue for each state, researchers at Lattice Publishing analyzed data from the Census Bureau’s 2017 Annual Survey of State Government Tax Collections. Its researchers calculated per capita tax amounts across the survey’s broad taxation categories: income, property, sales and gross receipts, licensing, and ‘other’. Here are the key insights from the analysis: