Tax Policies
Tax Policies in most states rely on the use of personal income and general sales taxes, which produce more than two-thirds of all state tax revenue. Each tax has advantages and disadvantages, discussed in the Tax Policy Handbook for State Legislators. Additional state revenue comes from a variety of fees and other charges. Policy principles that policymakers might use when considering the state tax and user fee mix are reviewed in Principles of a High-Quality State Revenue System and The Appropriate Role of User Charges in State and Local Finance.
Property taxes are the mainstay of local governments and provide the major source of funding for schools. Each state's property tax system is different, with variations in the types of property taxable, and the ways taxes are levied. Policymakers can find more about these systems in A Guide to Property Taxes: An Overview. In spite of their importance in state-local revenue systems, property taxes are unpopular, and states provide property tax relief to citizens in a number of different ways. The types of relief have increased in the past few years, as discussed in A Guide to Property Taxes: Property Tax Relief. During the past decade, the relationship between property taxes and state and local government services has changed significantly. Years of surplus revenue, coupled with voter dislike of the property tax, has resulted in major property tax cuts and has led states to shoulder a growing share of education costs. In addition, a number of states rely heavily on businesses and personal property to provide a large portion of property tax revenue. Sometimes, these taxes are not very straightforward or obvious. A Guide to Property Taxes: The Role of Property Taxes in State and Local Finances examines some of these issues.
State Tax and Expenditure Limits (TELs) are designed to curtail growth in government spending by placing constitutional or statutory restrictions on the amount a government entity can spend or tax its citizens. Traditionally, state TELs have limited revenues, expenditures or appropriations. Questions regarding the effectiveness of these traditional limits have led to additional measures such as voter approval requirements or legislative supermajority requirements that also limit state revenue and expenditure options. The restrictiveness of all these limits varies considerably depending upon their design.
Information on Tax Policy (General)
- Dedicated State Tax Revenues: A Fifty-State Report (a Philip Morris and Fiscal Planning Services, Inc. publication; June 2000).
NCSL currently is surveying the states to update this information (February 2006).
Rankings of state and state-local revenues and expenditures
- State-Local Tax and Expenditure Rankings ranks, per capita and per $100 of personal income, state-local taxes and expenditures in these categories:
- Personal Income Tax
- Corporate Income Tax
- Property Tax
- General Sales Tax
- Selective Sales Tax
- Revenues
- Taxes
- Expenditures
Updated July 2008.
Email statefiscal-info@ncsl.org for more information.
Visitor counts for this page. |
