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Local income and sales taxes

by xyonent
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Recent analysis by the Tax Foundation According to the 2019 U.S. Department of Transportation and Communications (DOT), property taxes remain the most significant source of local tax revenue in the United States, accounting for approximately 72% of local tax revenues. The study provides a current look at the two major sources of revenue after property taxes for U.S. local governments. It also provides a descriptive analysis of the most recent local tax data.

Key findings:

  • Local sales taxes and income taxes generate 13% and 5% of local revenues. Tax Revenue.
  • Local income taxes are permitted in 16 states and the District of Columbia.
  • Only seven states have local governments that impose neither a local income tax nor a local sales tax.
  • Many states lack uniformity in local income and sales taxes, resulting in a tax system that is not neutral and may motivate residents to make costly or economically inefficient relocation or cross-border shopping decisions.

“…State and local policymakers are constantly looking for other revenue sources that could potentially reduce costs. Property tax It would reduce the burden and replace lost property tax revenue. Many states have tried two alternatives: local income taxes and local sales taxes. But how do these taxes contribute to the overall competitiveness of state and local taxes? Should one be preferred over the other? Which is better: a sales tax or an income tax? Tax base What are the advantages and disadvantages of both for local governments?

Click here to read the Tax Foundation’s full report.

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