About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

LOG IN
LOG IN


1 Elizabeth Malm & Gerald Prante, Tax Foundation State-Local Tax Burden Estimates: An Overview of Methodology 1 (2014)

handle is hein.taxfoundation/taxfaara0001 and id is 1 raw text is: * Tax Foundation State-Local Tax AOUNDATON Burden Estimates: An Overview of Methodology Mar.2014 By Elizabeth Malm and Gerald Prante No. 10 Section A Methodological Overview and Data Sources A state's state-local tax burden, in general, is the total amount residents of that state pay in state and local taxes (even if some of those payments go to out-of-state jurisdictions). Our measure expresses this tax burden as a proportion of total state income. This means that two broad statistics are needed to make the calculation for each state: total state and local taxes paid by state residents (what we call the tax burden) and total state income. For the tax portion, the first step is to convert tax collections by state, as reported by the U.S. Census Bureau's Government Finance Division,1 to total state and local taxes paid by residents of each state, even if those taxes are paid to out-of-state jurisdictions. Each tax collection amount from the Census Bureau is first narrowed into different collection categories (such as property taxes being narrowed to personal property, property taxes on business property, seasonal homes real estate and residential real estate) to ensure the most accurate final tax burden estimates can be calculated. Then, those collection figures are allocated to states using some allocator, or the collection amount is assumed to be borne fully by the residents of the collecting state. For a detailed overview of what types of taxes are included in the total taxes paid measure, in addition to detailed descriptions of incidence assumptions and allocation methods for each tax subcomponent, see Section B. A similar procedure is completed for the income portion. National totals are taken from the Bureau of Economic Analysis (BEA) and then allocated to states based on some allocator. For the definition of income used in this study, in addition to descriptions of incidence assumptions and allocation methods for each subcomponent of income, see Section C. Before interpreting the figures in this piece as definitive measures of the degree of state and local tax exporting, one should note that the estimates presented here do not account for the federal deductibility of state and local taxes paid within the federal individual and corporate tax codes. Accounting for such deductibility is a goal for future state and local tax burden estimates because the deductibility is not uniform across geographies for a variety of reasons, most notably varying state and local tax policies and the fact that itemized deductions tend to disproportionately favor high-income individuals due mostly to the progressivity of the federal individual income tax. Further, an ideal tax burden study would include compliance costs and economic efficiency losses associated with taxation. Neither is included here. As a result, this study assumes 1 The U.S. Census Bureau's Government Finance Division encompasses four separate data sources: State Government Finances (h); State Government Tax Collections ), State & Local Government Finance (h), and Quarterly Summary of State & Local Taxes (