State Tax Burdens


A few people have asked me about data on state and local taxes. The easiest to use source is the  Federation of Tax Administrators page, which gives various tax measures based on census data.

The most recent census data on state/local tax burdens by state is for fiscal 2000. In that year, California collected taxes equal to 12.0 percent of personal income, slightly above the national average of 11.2. However, this number was surely swollen by the tech bubble. Because of Prop 13, California relies much more heavily than the average state on income taxes, and income tax receipts bulged as long as Silicon Valley was giving away lots of stock options. Before the bubble, California taxes were almost exactly average. Since there were no increases until the recent elimination of the VLF backfill (which, bizarrely, was counted as a state spending program*), it's likely that the tech slump has pushed California below average.

The  Tax Foundation has tables that purport to show tax burden for 2003. I don't know what their data sources are. I'm not inclined, however, to treat them as a reliable source. They are the people responsible for "Tax Freedom Day", which purported to show that typical families faced ever-higher taxation during the late 1990s, when in fact tax rates were stable or falling. CBPP has a nice  critique .

*As Bobby Pelgrift  points out , the usual suspects who accuse me of understating growth in California spending have missed the point that part of "spending" growth in the 1990s was actually a tax cut.

Originally published on the Official Paul Krugman Site, 8.26.03