Sunday, November 18, 2018
Hawai'i Free Press

Current Articles | Archives

Tuesday, July 03, 2018
To What Extent Does Your State Rely on Individual Income Taxes?
By Tax Foundation @ 5:13 PM :: 984 Views :: Hawaii Statistics, Taxes

To What Extent Does Your State Rely on Individual Income Taxes?

by Ben Strachman and Katherine Loughead, Tax Foundation, July 3, 2018 

The individual income tax is one of the main sources of revenue for states, comprising 23.5 percent of total U.S. state and local tax collections in fiscal year 2015, the latest year of data available. The individual income tax ties with the general sales tax as the second largest source of state and local tax revenue after the property tax (See Facts and Figures Table 8).

Today’s map shows the percentage of each state’s state and local tax collections attributable to the individual income tax.

Personal Income Tax Reliance by State, State Rankings

Oregon and Maryland are the states that rely most heavily on individual income taxes, generating 41.6 percent and 37.6 percent of their total state and local tax collections from the individual income tax, respectively. Both Oregon and Maryland are among the seventeen states where localities also levy income taxes. Oregon has chosen not to collect sales taxes, which contributes to that state’s heavy reliance on the individual income tax.

While the individual income tax is a major revenue source for state and local governments as a whole, some states rely on it very little or not at all. Seven states (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming) do not collect individual income taxes, while two states (New Hampshire and Tennessee) collect taxes on dividend and interest income but not wage income. Tennessee’s tax on investment income–known as the “Hall tax”–is in the process of being phased out and will be fully repealed by 2021, which will leave the state with no individual income tax. Similarly, in New Hampshire, the Senate passed a bill to phase out the state’s tax on investment income, but that legislation did not receive consideration in the House during the 2018 legislative session.

With no taxes on wage income, it is unsurprising that Tennessee and New Hampshire are the states that rely least heavily on the individual income tax, followed by North Dakota and Arizona, which generate 7.7 percent and 15.8 percent of their total tax collections from the individual income tax, respectively.

As we’ve pointed out previously, a state’s mix of tax sources carries implications for revenue stability and economic growth. Income taxes tend to be more harmful to economic growth than consumption taxes and property taxes. Income taxes affect labor participation, saving, and investment, while consumption taxes, such as sales taxes, tax what people spend as opposed to what they earn.

For instance, under the system in place in most states, if you earn money from wages and invest it, those wages will effectively be taxed twice—once when you collect the wages, and again when your investment yields a profit. Consumption taxes, on the other hand, are more neutral, and only tax what you spend money on, therefore only taxing wages once. Further, since many households see their personal income change with the business cycle, the individual income tax tends to generate a less stable source of revenue than other forms of taxation.

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

808 State Update AM940

ABCDEFG Blog

ACA Signups Hawaii

ACCE

Affordable Hawaii Coalition

ALEC

Alliance Defending Freedom

Aloha Conservative Alliance

Aloha Life Advocates

Aloha Pregnancy Care Center

American Council of Trustees and Alumni

American Mothers of Hawaii

AMVETS-Hawaii

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Audit The Rail

Ballotpedia Hawaii

Better Hawaii 

Blaisdell Memorial Project

Broken Trust

CAFR Hawaii

Castaway Conservative

Children's Alliance Hawaii

Children's Rights Institute

Christian Homeschoolers of Hawaii

Citizens for Recall

Cliff Slater's Second Opinion

Coffee Break

Conservative Forum for Hawaii

CSIS Pacific Forum

DAR Hawaii

DeedySupport.com

DVids Hawaii

E Hana Kakou Kelii Akina

E Māua Ola i Moku o Keawe

Farmers For Choice Hawaii

FIRE

Fix Oahu!

Follow the Money Hawaii

Frank in Hawaii

Front Page Magazine

Frontline: The Fixers

Genetic Literacy Project

Get Off Your Butts!

God, Freedom, America

Grassroot Institute

Habele.org

Hawaii Aganst Assisted Suicide

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crime Victims' Rights

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defending Marriage

Hawaii Defense Foundation

Hawaii Families for Educational Choice

Hawaii Family Advocates

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Firearm Community

Hawaii Fishermen's Alliance

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii March for Life

Hawaii Meth Project

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Right to Life -- Big Island

Hawaii Right to Life -- Oahu

Hawaii Senate Informer

Hawaii Shield Law Coalition

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

Heritage Foundation

HI Coalition Against Legalized Gambling

HIEC.Coop

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Homeless Crisis

Honolulu Navy League

Honolulu Traffic

Horns of Jericho Blog

House Minority Blog

House Republican Caucus YouTube

HPACC

Hump Day Report

Hunting, Farming and Fishing Assoc.

I Vote Hawaii

If Hawaii News

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

Iowa Meets Maui

Jackson v Abercrombie

Jihad Watch

Judgepedia Hawaii

July 4 in Hawaii

Kahle v New Hope

Kakaako Cares

Kau TEA Party

Kauai Co GOP

Keep Hawaii's Heroes

KeyWiki

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

Mauna Kea Recreational Users Group

MentalIllnessPolicy.org

Middle East Forum--The Legal Project

Mililani Conservatives for Change

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

Muslim Brotherhood in America

NAMI Hawaii

NARTH

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

National Wind Watch

New Zeal

NFIB Hawaii News

No GMO Means No Aloha

Northwest Economic Policy Seminar

Not Dead Yet, Hawaii

Now What I Really Think

NRA-ILA Hawaii

Oahu Alternative Transport

ObamaCare Abortion Hawaii

OHA Lies

Ohana Policy Group

OurFutureHawaii.com

Pacific Aviation Museum

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons 

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

Republican Party -- Hawaii State

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Salvage The Rail

Save the Plastic Bag

School Choice in Hawaii

SenatorFong.com

SIFE Remington

SIFE W. Oahu 

Sink the Jones Act

Smart About Marijuana--Hawaii

St Marianne Copenull

State Budget Solutions Hawaii

State Policy Network

Statehood for Guam

Tax Foundation of Hawaii

TEA Party Maui

TFB Micronesia

The Harriet Tubman Agenda

The Long War Journal

The Real Hanabusa

Time Out Honolulu

Truth About Trade & Technology - Hawaii

UCC Truths

Union Members Know Your Rights

United Veterans Hawaii

US Tax Foundation Hawaii Info

Valor in the Pacific

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT