Tax Foundation releases report

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Washington, D.C. — The Tax Foundation, a nonpartisan organization, released figures this week indicating that 9.8 percent of all income in Ohio went toward state and local taxes in fiscal year 2012.

The foundation announced its annual State-Local Tax Burden Rankings Wednesday.

The report highlights the state-local tax burden on taxpayers in each of the 50 states, details how much residents pay to their state and other states and illustrates tax burden trends over time and within each state.

Here is a breakdown of Ohio’s state-local tax burden:

• State-Local Tax Burden rank: 19th. In 2011, Ohio ranked 18th.

• Percent of income in Ohio that goes to state and local taxes: 9.8 percent. In 2011, it was 9.9 percent.

• Amount of taxes paid to Ohio per capita: $2,986.

• Amount of taxes paid to other states per capita: $938.

The foundation noted that a significant amount of taxation occurs across state lines, and that this shifting is not uniform. For instance, one might pay sales taxes at the local corner store, but also pay sales taxes when on vacation in another state.

“There’s an ongoing debate over how much is enough when it comes to taxes, but it isn’t always informed by accurate data,” said Tax Foundation Economist Nicole Kaeding. “Our study gives taxpayers a comprehensive look at where tax burdens are felt across the states, so that they can have an informed discussion on the size and reach of state and local taxes.”

The study’s key findings include:

• During the 2012 fiscal year, state-local tax burdens as a share of state incomes decreased on average across the U.S. Average income increased at a faster rate than tax collections, driving down state-local tax burdens on average.

• New Yorkers faced the highest burden, with 12.7% of income in the state going to state and local taxes. Connecticut (12.6 percent) and New Jersey (12.2 percent) followed closely behind. On the other end of the spectrum, Alaska (6.5 percent), South Dakota (7.1 percent) and Wyoming (7.1 percent) had the lowest burdens.

• On average, taxpayers pay the most taxes to their own state and local governments. In 2012, 78 percent of taxes collected were paid within the state of residence, up from 73 percent in 2011.

State-local tax burdens are very close to one another and slight changes in taxes or income can translate to seemingly dramatic shifts in rank. For example, Delaware (16th) and Colorado (35th) only differ in burden by just over one percentage point. However, while burdens are clustered in the center of the distribution, states at the top and bottom can have substantially different burden percentages: New York (12.6 percent) and Alaska (6.5 percent).

The foundation includes all taxes reported by the Census Bureau’s State and Local Government Finance division, the most comprehensive resource on state and local tax collections data and the tax burden model’s starting point. These taxes include property taxes; general sales taxes; excise taxes on alcoholic beverages, amusements, insurance premiums, motor fuels, parimutuels, public utilities, tobacco products, and other miscellaneous transactions; license taxes on alcoholic beverages, amusements, general corporations, hunting and fishing, motor vehicles, motor vehicle operators, public utilities, occupations and businesses not classified elsewhere, and other miscellaneous licenses; individual income taxes; corporate income taxes; estate, inheritance, and gift taxes; documentary and stock transfer taxes; severance taxes; special assessments for property improvements and miscellaneous taxes not classified in one of the above categories.

The state and local tax burden estimates for fiscal year 2012 are based on the most recent data available from the Census Bureau, the Bureau of Economic Analysis and all other data sources employed.

Ohioans pay 9.8 percent of income in local taxes

Staff report

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