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Articles by Morgan Scarboro
What Really Happened to State Revenues During COVID-19?
Key Takeaways: Early fears that state tax collections would drop by nearly half turned out to be incorrect. In fact, state tax revenue on average is up 12.1 percent. This data (from the Census Revenue) can be messy because of income tax return deadline extensions and timing issues, but we chose to use this data in order to create an apples to apples comparison for the first three quarters of Fiscal Years 2020 and 2021.
States Cannot Afford Another Tax Filing Deadline Extension
Key Takeaways: An additional blanket delay in tax filing or payments will be counterproductive and will crush state and local governments. States are already facing enormous budget challenges, and another filing delay will make it nearly impossible for states to balance their budgets. As we move forward to mitigate the economic harm caused by COVID-19, the federal government should focus on targeted relief, not simplistic solutions, like another filing extension, that solve nonexistent problems.
Sales Taxes Data Sheds Light on State Budget Troubles
Key Takeaways: States are facing unprecedented revenue losses in the wake of COVID-19, although state experts disagree on the extent of the crisis. In May, every state with available data reported a decline in sales tax revenue compared to the prior year, ranging from a 51 percent drop in Washington, DC to a one percent drop in South Dakota. Though exact revenue estimates may differ, policy analysts and economists agree that states are facing unprecedented revenue losses as a result of COVID-19.
New Report: Six States Face Revenue Shortfalls in 2019 - A Marked Decrease from Previous Years
State budgets are in a strong position headed into 2019, with only six states projecting revenue shortfalls for the upcoming fiscal year. More than four times as many states faced budget deficits in 2018 and five times as many states did in 2017. A primary driver of this improved fiscal picture is the rise in income tax collections, which spiked as taxpayers pushed their liability to 2018 to take advantage of federal tax reform provisions.
S.C. lawmakers must pass 'tax conformity' legislation
Unless South Carolina lawmakers act soon, Palmetto State taxpayers will have to spend more time and money filing their tax returns next year.When Congress passed the Tax Cuts and Jobs Act last December, it not only reformed the federal tax code, but also put all 50 states in a position to fix their own tax systems. Almost every state ties itself to (or conforms to) the federal code for defining what’s taxable and what isn’t.
State Tax Changes Taking Effect July 1, 2018
The majority of states enact tax changes at the start of the calendar year; however, some states implement changes at the beginning of the fiscal year. Ten states have tax changes taking effect on July 1, 2018, the beginning of the 2019 fiscal year. Indiana has been taking steps to reduce its corporate income tax rate since 2011.
How High Are Marijuana Taxes in Your State?
April 26, 2018 Katherine Loughead Morgan Scarboro Katherine Loughead, Morgan Scarboro As public opinion increasingly favors the legalization of recreational marijuana, a growing number of states must determine how to tax legal sales of cannabis. To date, nine states (Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, Vermont, and Washington) and the District of Columbia have legalized recreational marijuana, but only seven of these jurisdictions have legal markets.
A Measured Approach to Income Tax Relief in Minnesota
The tax reform debate is heating up in Minnesota. Governor Mark Dayton (DFL) released his proposal several weeks ago, but Republicans have criticized the plan. Criticism picked up particularly after the Department of Revenue released an incidence report that shows the governor’s tax proposal combined with his proposal to extend the MinnesotaCare 2 percent provider tax would raise the tax burden on all Minnesotans.
Does Your State Have an Estate Tax or Inheritance Tax?
In addition to the federal estate tax of 40 percent, some states impose an additional estate or inheritance tax. Twelve states and the District of Columbia impose an estate tax while six states have an inheritance tax. Maryland is the only state in the country to impose both. Washington state’s 20 percent rate is the highest estate tax rate in the nation; eight states and DC are next with a top rate of 16 percent. Two states match the federal exemption level of $11.2 million.
How High are Spirits Excise Taxes in Your State?
Compared to taxes on alcoholic beverages such as wine and beer, distilled spirits are taxed at much higher rates across the states, ostensibly to adjust for higher alcohol content. Today’s map shows how spirits excise taxes in your state compare. Data for this map comes from the Distilled Spirits Council of the United States. To allow for comparability across states, they use a methodology that calculates implied excise tax rates in those states with government monopoly sales.
Facts and Figures 2018: How Does Your State Compare?
Download the 2018 Facts and Figures App How do taxes in your state compare nationally? Facts and Figures, a resource we’ve provided to U.S. taxpayers and legislators since 1941, compares the 50 states on over 40 measures of taxing and spending. Browse the PDF below or download the Facts and Figures app to explore data on state individual and corporate income taxes, sales taxes, excise taxes, property taxes, business tax climates, and more.
Minnesota's Budget Proposal: The Good and the Bad
Minnesota’s Governor Dayton recently released his budget proposal, including his proposed changes to the state’s tax system in the wake of federal tax code changes. The state has a $329 million surplus, and Governor Dayton plans to spend all but $123 million of it. The Governor’s tax proposals are a bit of a mixed bag.
State Individual Income Tax Rates and Brackets for 2018
Individual income taxes are a major source of state government revenue, accounting for 37 percent of state tax collections.[1] Their prominence in public policy considerations is further enhanced by the fact that individuals are actively responsible for filing their income taxes, in contrast to the indirect payment of sales and excise taxes. Forty-three states levy individual income taxes.
Kentucky Needs Tax Reform, Not Cigarette Tax Hikes
Kentucky’s current fiscal situation is dire. With one of the worst funded pension systems in the country and a budget that’s facing the possibility of severe cuts, legislators in the state are understandably having a difficult time juggling the state’s finances. The House budget plan has not yet been released, but details have emerged on the revenue raisers.
State Corporate Income Tax Rates and Brackets for 2018
Corporate income taxes are levied in 44 states. Though often thought of as a major tax type, corporate income taxes account for an average of just 5 percent of state tax collections and 2.6 percent of state general revenue.[1] Iowa levies the highest top statutory corporate tax rate at 12 percent, closely followed by Pennsylvania (9.99 percent) and Minnesota (9.8 percent). Three other states (Alaska, Illinois, and New Jersey) levy rates of 9 percent or higher.
Which States Rely the Most on Federal Aid? - Tax Foundation
State-level taxes may be the most visible source of state government revenues for most taxpayers, but it’s important to remember that’s not the only source of state revenue. State governments also receive a significant amount of assistance from the federal government in the form of federal grants-in-aid. Federal aid is given to states for Medicaid, transportation, education, and other means-tested entitlement programs administered by the states.
Where Did Americans Move in 2017?
States compete with each other in a variety of ways. Competing to attract and retain new residents is just one example. United Van Lines tracks its customers’ state-to-state migration and releases the data yearly. By comparing the number of inbound moves to the number of outbound moves, United Van Lines data gives us early insights into annual interstate migration, available much sooner than government data sources.
What Percentage of Lottery Winnings Would be Withheld in Your State?
The Powerball Jackpot has hit $550 million and Americans in 43 states and D.C. are lining up for tickets. Sooner or later, there will be at least forty-five big winners of the current Powerball game, and forty-four of them are already known. That’s because only about half of Powerball ticket revenue is returned in the form of prizes, which is lower than the average for other lottery games.
Senate Tax Cuts and Jobs Act: Impact on States - Tax Foundation
With tax reform in the news and Thursday’s release of the Senate version of the Tax Cuts and Jobs Act, Americans are trying to understand how changes to the tax code will affect their families. The Senate’s plan would grow the economy while simplifying the tax code and reducing marginal rates.
Tax Cuts and Jobs Act: Impact on State Jobs & Incomes - Tax Foundation
With yesterday’s release of the Tax Cuts and Jobs Act, Americans are trying to understand how these tax changes would impact their families. The pro-growth tax plan would simplify the tax code by eliminating most itemized deductions, while reducing marginal tax rates.
How High Are Tax Collections Where You Live?
Total state and local tax collections per capita vary drastically across the country, but the highest collections might surprise you. The three states with the highest state and local collections per capita are North Dakota ($9,746), New York ($8,410), and Alaska ($7,555). The three states with the lowest state and local collections per capita are South Carolina ($3,220), Tennessee ($3,092), and Alabama ($3,002).
Does Your State Levy a Capital Stock Tax? - Tax Foundation
Only 16 states levy a capital stock tax, a tax on the net worth of a business. These taxes are often levied at a low percentage on the wealth of a firm. Because the tax is paid in good times and bad, businesses often find themselves using precious cash flow to pay it. In broad economic terms, capital stock taxes (referred to as franchise taxes in many states) are destructive because they disincentivize the accumulation of additional wealth, or capital, which distorts the size of firms.
How High Are Excise Tax Collections Where You Live? - Tax Foundation
Excise taxes are particular taxes levied on specific goods or activities, not general tax bases like income or consumption. Some excise taxes are fairly well-known to the public, like cigarette or alcohol taxes, but others are more hidden, like taxes on admission for amusement businesses. On average, these excise taxes make up a relatively small portion of state and local tax revenue – about 11 percent – but per capita collections vary widely among states.
How High Are Property Tax Collections Where You Live? - Tax Foundation
States collect property taxes in a number of ways: some impose a rate or a millage on the fair market value of property, while others impose it on some percentage (the assessment ratio) of the market value, yielding an assessed value. Regardless of how they are collected, property taxes are an important revenue tool for state and local governments. In fiscal year 2014, they comprised the largest source of state and local tax collections, at 31.3 percent.
How High Are Sales Tax Collections in Your State? - Tax Foundation
Forty-five states and the District of Columbia levy a statewide sales tax. State rates vary widely among states, from 2.9 percent in Colorado to 7.25 percent in California. This does not take into account the local sales tax rates that are levied in thirty-eight states, which can significantly change the combined rate for consumers.
How Much Does Your State Collect in Corporate Income Taxes Per Capita? - Tax Foundation
The corporate income tax is one of the smallest sources of state tax revenue. According to Census data, in FY 2015, the corporate income tax only comprised 5.3 percent of state tax collections. As we outlined earlier this year, there are several reasons why the corporate income tax share is so low on average. Some mistake the corporate income tax as the entirety of a business’s tax burden.
Net Operating Loss Carryforward & Carryback Provisions by State
The corporate income tax should tax only the profits of a corporation; however, profitability can vary for businesses. A business’s yearly profit may not capture its true profitability. Businesses in particularly cyclical industries may experience substantial profits during boom years, but also experience substantial losses during bust years. Over time, that same business might actually have an average profit margin.
How Are Your State’s Roads Funded?
July 13, 2017 Morgan Scarboro Joseph Bishop-Henchman Morgan Scarboro, Joseph Bishop-Henchman Gas taxes are typically used to fund infrastructure maintenance and new projects, but the share of state and local road spending that is covered by tolls, user fees, and taxes varies drastically. It ranges from only 12 percent in Alaska to 76.3 percent in Hawaii.
Ten States Begin FY2018 Without Budget In Place - Tax Foundation
For the overwhelming majority of states, state fiscal years begin on July 1, with 46 of the 50 states beginning on the date. As the calendar moves into July, there are still a number of states without budgets for the now-started fiscal years. As of July 3, 10 states are currently without budgets for the 2018 fiscal year.
Ten States Begin FY2018 Without Budget In Place - Tax Foundation
For the overwhelming majority of states, state fiscal years begin on July 1, with 46 of the 50 states beginning on the date. As the calendar moves into July, there are still a number of states without budgets for the now-started fiscal years. As of July 3, 10 states are currently without budgets for the 2018 fiscal year.
State Tax Changes Taking Effect July 1, 2017 - Tax Foundation
While most states enact tax changes at the beginning of the calendar year, a number of them implement changes at the beginning of the fiscal year. Seven states have tax changes that will take effect on July 1, 2017, the beginning of the 2018 fiscal year. Indiana has been reducing its corporate income tax rate from 8.5 percent since 2011, when the state adopted tax reform.
Ohio Illustrated: A Visual Guide to Taxes & The Economy - Tax Foundation
Taxes are complicated. Each state’s tax code is a multifaceted system with many moving parts, and Ohio is no exception. This chart book provides readers with a broad perspective on the impact of Ohio’s overall economy and tax system. It also provides detailed illustrations to each of Ohio’s major taxes–individual income taxes, business taxes, sales and excise taxes, and property taxes–to help make the complicated task of understanding the state’s tax code a bit easier.
How High are Marijuana Taxes in Your State?
As public support for marijuana legalization rises, policymakers are left to figure out the proper way to tax it if their state follows the trend. Eight states have legalized recreational marijuana, with several approaches to taxation being used. Massachusetts for example, set to begin sales in mid-2018, plans to levy an additional 3.75 percent tax on retail sales. Washington also levies a sales tax, but at a much higher rate of 37 percent.
Does Your State Have an Estate or Inheritance Tax? - Tax Foundation
In addition to the federal estate tax of 40 percent, some states impose an additional estate or inheritance tax. Fourteen states and the District of Columbia impose an estate tax while six states have an inheritance tax. Maryland and New Jersey have both. Washington state’s 20 percent rate is the highest estate tax rate in the nation; ten states and DC are next with a top rate of 16 percent.
Which Places Pay the Most in Property Taxes? - Tax Foundation
Property taxes are an important tool to help finance state and local governments. In fiscal year 2014, they comprised the largest source of state and local tax collections, at 31.3 percent. Median property taxes paid varies among states. The lowest median property tax is $214 in Richland Parish, Louisiana, in the northeast part of the state.
How High Are Cigarette Taxes in Your State? - Tax Foundation
For this week’s map, we look at state cigarette tax rates across the country, which are levied on top of the $1.0066 federal rate per 20-pack of cigarettes. As of 2014, taxes accounted for almost half of the retail cost of a pack of cigarettes. The average state tax rate is $1.68 per pack. New York, however, remains in the top spot with the highest state rate in the country at $4.35 per pack. Connecticut ($3.90), Rhode Island ($3.75), and Massachusetts ($3.51) follow closely behind.
To What Extent Does Your State Rely on Individual Income Taxes? - Tax Foundation
Individual income taxes are a major source of state and local government tax revenue, accounting for 22.9 percent of collections, the third largest category. Forty-one states tax wage and salary income, while two states – New Hampshire and Tennessee – exclusively tax dividend and interest income. (Tennessee is currently phasing this tax out and will not levy any income tax by 2022.) Seven states levy no individual income tax at all.
To What Extent Does Your State Rely on Sales Taxes? - Tax Foundation
Sales taxes are one of the largest sources of state and local tax revenue. On average, 23.3 percent of state and local tax revenues came from sales taxes in fiscal year 2014. Combined state and local sales tax rates vary across states, with combined rates ranging from 9.98 percent in Louisiana to 5.4 percent in Wyoming. Local sales taxes are collected in 38 states. Five states do not have statewide sales taxes: Alaska, Delaware, Montana, New Hampshire, and Oregon.
To What Extent Does Your State Rely on Property Taxes? - Tax Foundation
Property taxes are an important revenue source for state and local governments. In fiscal year 2014 (the most recent data available), property taxes were the largest source of state and local tax collections, comprising 31.3 percent. As a colleague explained last year, states tax real property in a variety of ways. Some states impose a rate or millage on the full fair market value of the property, while others impose it on a given percentage of the market value or even based on income potential.
How Well Funded Are Pension Plans in Your State? - Tax Foundation
According to preliminary 2015 data, state and local pension debt now exceeds a combined $1.5 trillion. Strong returns on investment (averaging 17 percent in 2014) have helped to reduce the debt, but the message is still clear: many states are facing a pension crisis. States vary in the way they structure their pension systems, but some states are transitioning new employees into defined contribution or hybrid plans rather than more traditional, and more costly, defined benefit plans.
Multiple Tax Proposals in Minnesota - Tax Foundation
With a projected surplus of $1.65 billion, some policymakers in Minnesota want tax reform. Several plans are being discussed in the state legislature, ranging from a $300 million tax cut proposed in the updated budget of Governor Mark Dayton (D) to a $1.35 billion tax cut proposed by House Republicans. The first plan from Senate Republicans can be largely broken down into two parts – individual income tax cuts and business tax cuts.
Facts & Figures 2017: How Does Your State Compare? - Tax Foundation
How do taxes in your state compare nationally? This convenient resource compares the 50 states on many different measures of taxing and spending, including individual and corporate income tax rates, business tax climates, excise taxes, tax burdens and state spending. Now you can take Facts & Figures wherever you go! Download the app for your iPhone, iPad, or Android device:
State Individual Income Tax Rates and Brackets 2017 - Tax Foundation
Individual income taxes are a major source of state government revenue, accounting for 36 percent of state tax collections.[1] Their prominence in public policy considerations is further enhanced by the fact that individuals are directly responsible for filing their income taxes, in contrast to the indirect payment of sales and excise taxes. To many taxpayers, the personal income tax is practically synonymous with their own tax burdens. Forty-three states levy individual income taxes.
Testimony: Reforming the Estate Tax in Minnesota - Tax Foundation
My name is Morgan Scarboro, and I’m a policy analyst at the Tax Foundation. For those unfamiliar with us, we are a non-partisan, non-profit research organization that has monitored fiscal policy at all levels of government since 1937. We have produced the Facts & Figures handbook since 1941, we calculate Tax Freedom Day each year, we produce the State Business Tax Climate Index, and we have a wealth of other data, rankings, and information at our website, www.TaxFoundation.org.
Which States Rely the Most on Federal Aid?
January 11, 2017 Morgan Scarboro Morgan Scarboro See Updated Map State-level taxes may be the most visible source of state government revenues for most taxpayers, but it’s important to remember that they are not the only source of state revenue. State governments also receive a significant amount of assistance from the federal government in the form of federal grants-in-aid.
Which States Rely the Most on Federal Aid?
State-level taxes may be the most visible source of state government revenues for most taxpayers, but it’s important to remember that they are not the only source of state revenue. State governments also receive a significant amount of assistance from the federal government in the form of federal grants-in-aid. In fiscal year 2014, over 60 percent of federal spending in the states went to benefits payments to individuals, including Social Security and Medicare.
Soda Tax Benefits Are Overrated
With four U.S. cities set to vote on whether to enact excise taxes on soda, researchers at the World Health Organization recently made headlines with a report advising countries to tax sugary beverages at rates of at least 20 percent. Proponents say that such a tax will have positive impacts on a variety of health outcomes like obesity, type 2 diabetes prevalence and tooth decay. However, these proposals are likely to do a lot more harm than good.
Maine Question 2: Will Maine Claim the 2nd Highest Individual Income Tax Rate in the Country?
In November, Maine citizens will vote on Question 2, The Maine Tax on Incomes Exceeding $200,000 for Public Education Measure, which imposes an additional 3 percent tax on individual income taxes for earnings over $200,000 in order to supplement funding for K-12 public education. If enacted, Maine would jump to the 2nd highest top individual income tax rate in the country at 10.15 percent, trailing only California’s 13.3 percent top rate.
Marijuana Taxes: Lessons from Colorado and Washington
Download SPECIAL REPORT No. 321: Marijuana Legalization and Taxes: Lessons for Other States from Colorado and Washington (PDF) Key Findings Marijuana tax collections in Colorado and Washington have exceeded initial estimates, and a nationwide legalization-and-tax regime could see states raise billions of dollars per year in marijuana tax revenue.
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