![]() Partly, it is a reversion to the mean: state revenues skyrocketed, and it’s okay for them to level off or even decline a little, as long as the new totals remain higher (in real terms) than before. Revenues soared in FY 2021, jumping a full 10 percent (inflation-adjusted) higher than pre-pandemic figures, edging up even higher in FY 2022 (to 12 points up) before coming down to earth a bit in FY 2023. Much of that gain is subsumed by inflation, but even after adjusting for inflation, state and local tax revenues are more than 7 percent higher than they were pre-pandemic. Since FY 2019, the last full fiscal year before the pandemic, state and local tax collections have risen more than 27 percent. And fortunately, while we can’t go state by state, we do have quarterly data for the national aggregate of state and local tax collections through FY 2023. ![]() Even though these maps are always limited by the timing of Census data releases, it’s fair to ask where things stand now. State and local governments fared well in FY 2021, but with all the ways our world has changed since the start of the pandemic, that feels like eons ago. It is important to keep both legal incidence and economic incidence in mind when evaluating the true costs of any tax. Taxes on businesses may also be exported, at least in part, to investors across the country, and to employees wherever they are located. As a result, states that generate substantial amounts of tax revenue from tourism may also show tax collections per capita that are higher than the actual tax burden that falls on the in-state population. Travel taxes-such as hotel, car rental, and meal taxes-also disproportionately impact nonvoting nonresidents who have few means of redress. It’s worth noting that severance taxes are only one of many examples of the “tax exporting” that states engage in. These states export much of their tax burden, and there was simply less to export that year. Similar effects are evident in other resource-dependent states, like North Dakota and Wyoming, which had markedly lower per capita collections in FY 2021 than in years prior, or (based on their own revenue data) since. FY 2021, however, captured a period of significant fluctuations in oil markets, from which the industry-and Alaska’s revenues-have since recovered. At the other end of the spectrum, Alaska was lowest at $4,192, followed by Alabama ($4,245), Tennessee ($4,272), Florida ($4,405), and Mississippi ($4,435).Īlaska is an anomaly here: while the state imposes incredibly low tax burdens on residents, its severance taxes generate substantial revenue that often yield relatively high collections per capita. New York followed at $10,266 in state and local tax collections per person, with Connecticut ($9,458), California ($9,175), New Jersey ($8,303), and Massachusetts ($8,101) not far behind. But because the events of recent years are so significant, we will also discuss the trajectory of state and local tax collections through FY 2023, which ended in June of this year.įor FY 2021, the District of Columbia surpassed all states with $13,278 in per capita tax collections. Today’s map shows state and local tax collections per capita in each state as of fiscal year (FY) 2021, the most recent year for which full state-by-state data are available. ![]() It is sometimes referred to as a “ hidden tax,” as it leaves taxpayers less well-off due to higher costs and “ bracket creep,” while increasing the government’s spending power. ![]() ![]() The same paycheck covers less goods, services, and bills. Contrary to initial expectations, the pandemic years were good for state and local tax A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.Ĭollections, and while the surges of 20 have not continued into calendar year 2023, revenues remain robust in most states and well above pre-pandemic levels even after accounting for inflation Inflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. ![]()
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