changes in state and/or local tax policy or in the assumptions of the study can result in misleading information under s
Income Tax Property Tax Sales Tax Automobile Taxes Total Taxes
STATE RANKING OF TAX BURDEN PER INCOME BRACKET BY TAX CATEGORY IN PHOENIX AZ $25,000 $50,000 $75,000 $100,000 $150,000 25 38 39 41 * 43 42 42 2 2 2 1 27t 24t 17 17 17 42 44 42
41 42 2 13 41
Income Tax Property Tax Sales Tax Auto Taxes Total Taxes
TAX BURDEN PER INCOME BRACKET BY TAX CATEGORY IN PHOENIX AZ AS A PERCENTAGE OF THE MEDIAN OF 51 CITIES 2013 $25,000 $50,000 $75,000 $100,000 $150,000 NA 42% 54% 58% 61% 86% 85% 84% 83% 82% 146% 144% 145% 144% 146% 85% 91% 89% 90% 111% 102% 85% 85% 83% 83%
BUSINESS TAX BURDEN IN ARIZONA AS A PERCENTAGE OF PRIVATE-SECTOR GDP, PERCENTAGE DIFFERENCE FROM NATIONAL AVERAGE 2009 2010 2011 2012 2013 License Fees/Other Taxes -47.8% -51.1% -46.0% -62.9% -62.9% Unemployment Tax -46.0% -66.7% -43.8% -52.3% -52.3% Individual Income Tax -65.8% -46.2% -50.0% -50.6% -50.6% Corporate Income Tax -34.4% -48.6% -25.0% -20.7% -20.7% Excise Tax -21.8% -23.3% -28.6% -27.2% -27.2% Sales Tax 52.5% 54.1% 33.7% 72.8% 72.8% Property Tax 5.3% 15.7% 15.7% 29.7% 29.7% Total -3.5% 1.0% -3.0% 8.1% 8.1%
Total Difference from Average State Difference from Median State
TOTAL TAXES AS A PERCENTAGE OF INCOME (AND DIFF FROM AVE STATES) BY INCOME BRACKET IN PHOENIX, AZ $25,000 $50,000 $75,000 $100,000 $150,000 12.6% 6.8% 6.8% 7.2% 6.9% 0.7 -2 -1.9 -1.7 -2.1 1.2 -2 -1.7 -1.7 -2.4
chart-main-title chart-axis-header Phoenix, Arizona
Total Taxes in Arizona as a Percent of Income, 2007 $25,000 $50,000 $75,000 $100,000 $150,000 12.6% 6.8% 6.8% 7.2% 6.9%
chart-main-title chart-axis-header Income Tax Property Tax Sales Tax Auto Taxes Total Taxes
Household Tax Burden in Phoenix as a Percentage of the Median of 51 Cities, State and Local Govern 25000 50000 75000 100000 150000 NA 41.8% 54.4% 57.9% 60.5% NA 85.4% 83.6% 82.5% 81.6% 145.6% 144.1% 145.2% 144.4% 145.7% 85.0% 91.0% 88.6% 89.9% 111.0% NA 85.1% 84.5% 82.6% 82.9%
Business Tax Burden as a Percentage of Private-Sector GDP in Arizona, Percentage Difference from th chart-main-title chart-axis-header 2013 Total 8.1% Property Tax 29.7% Sales Tax 72.8% Excise Tax -27.2% Corporate Income Tax-20.7% Individual Income Tax-50.6% Unemployment Tax -52.3% License Fees/Other Taxes -62.9%
LastUpdate SourceLine SourceURL SourceLine2 SourceURL2 Dataset Description
06/14/15 Government of the District of Columbia http://cfo.dc.gov/cfo/cwp/view,a,1324,q,612643.asp Ernst & Young and the Council on State Taxation. http://www.cost.org/StateTaxLibrary.aspx?id=17768
Various studies using differing methodologies have attempted to measure tax burden by state or by city, with widely varying results. Most of these studies have combined business and individual/household taxes, with the results not being indicative of either the business tax burden or the household tax burden. One approach to comparing household tax burdens across geographic areas is to select a hypothetical household based on household composition, income, and other factors. The tax burden for this household is calculated using the actual tax code in each state. Such studies typically limit the analysis to major taxes paid directly by households and often select just one hypothetical household, typically of upper-middle income. Because the property tax varies by place within a state, these studies usually pick one city in each state to compare. Since these studies actually work through the tax code of each state, they potentially result in an accurate portrayal of geographic variations in tax burden for the selected household, but should not be generalized to other households. A study conducted annually by the District of Columbia is an example of the hypothetical household approach to comparing tax burden. It calculates the tax bill for a family that consists of two wage-earning spouses and one school-age child at five widely different income levels ranging from $25,000 to $150,000. Among the specific assumptions is that the household owns its home except at the lowest income and that wage and salary income is split 7030 percent between two adults in the household, with the rest of the income divided 50-50. The District of Columbia study calculates the tax burden in each of four tax categories: individual income tax, residential property tax, general sales and use tax, and automobile taxes (including gasoline tax, registration fees, excise tax, and personal property tax). Taxes are calculated for the largest city in each state and for the District of Columbia. Various organizations report a measure of business tax burden, but the results are highly inconsistent. The most detailed study with the strongest methodology is produced by Ernst & Young under contract to the Council on State Taxation. They present an estimate of the taxes businesses pay in each of eight categories. To compare states, an effective tax rate is calculated as the taxes paid by businesses divided by private-sector gross domestic product by state. Technical Notes The authors of the household tax burden study advise users not to compare the hypothetical tax burdens across years since “any number of small changes in state and/or local tax policy or in the assumptions of the study can result in misleading information under such comparisons.” Results are not shown at the $25,000 income level for the income tax (because the income tax burden at this income is minimal in most states) or for the property tax (since a household at this income is assumed not to own their home). In the business tax burden study, many of the tax components are estimated by state. As detailed as this study is, the authors caution that their results do not provide enough information to fully evaluate a state’s competitiveness. Two states with an identical overall business tax burden may have very different tax systems. One may more heavily tax “base” economic activities, which consist of companies that sell most of their goods and services to customers located outside the state. Base activities drive the economic growth of any state. Some of the inputs to the calculation of gross domestic product by state are estimated. These estimates are subject to revision.
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* Tax assumed to be equal in all states. t: tie NA The total household tax burden in Phoenix is about 20 percent below the median city at each of the four highest income levels. At all income levels, the sales tax burden in Phoenix is nearly double the median — the highest or second highest among 51 cities. In contrast, the property tax burden and the personal income tax burden in Phoenix each is only approximately half of the median of the 51 cities at each of the four highest income levels. The overall business tax burden in Arizona is slightly less than the national average. The two primary sources of revenue—the sales tax and the property tax—are above the national average, with the sales tax burden one-third more than average. All other business tax burdens range from 25-to-50 percent below average. Furthest below average is the individual income tax, which is used by owners of small businesses.
