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Business Paid $671B in State, Local Taxes in Fiscal 2013
WASHINGTON -- American businesses paid $671 billion in state and local taxes in U.S. fiscal 2013, accounting for 44.9% of all state and local taxes, based on the Council on Srtate Taxation data analyzed by Ernst & Young LLP. State business taxes grew 4.7% compared to local tax growth of 3.7%, the third consecutive year of increases in both categories.
While this is the lowest share of total state and local taxes since fiscal 2006, the share businesses pay has remained relatively stable, peaking at 45.7% in fiscal 2007, less than one percentage point different from the current share, according to the Ernst & Young study.
"The change in business taxes suggests relatively broad, yet still gradual, economic recovery," said Andrew Phillips, a principal in Ernst & Young and director of its regional economics practice, in a prepared statement. "We saw most categories of business taxes rise in fiscal 2013. In most states, increases were due to growth in property values, business incomes, and transactions subject to the sales tax."
The state and local business tax estimates in the study reflect tax collections from July 1, 2012 through June 30, 2013, and include business property taxes, sales and excise taxes businesses pay on their input purchases and capital expenditures, gross receipts taxes; corporate income and franchise taxes; business and corporate license taxes, unemployment insurance taxes, individual income taxes paid by owners of noncorporate (pass-through) businesses and other state and local taxes that are the statutory liability of business taxpayers.
The states with the highest state and local business tax growth in 2013 are North Dakota (29.9%), Hawaii (10.4%), Mississippi (7.7%), Texas (7.7%) and Utah (7.5%). The states with the largest decreases in tax collections are Alaska (-23.7%), Louisiana (-6.5%), Wyoming (-5.1%), Kansas (-2.6%) and Maine (-0.6%).
Business property taxes and sales tax on business inputs are the largest components of total state and local business taxes, the study says. Business property taxes rose 3.7% in fiscal 2013, a gain of $8.5 billion. Property taxes remain by far the largest state and local tax businesses pay, accounting for 36.1% of the total. General sales taxes on business inputs and capital investment totaled $139.8 billion, or 20.8% of state and local business taxes.
While overall sales taxes increased 3.8%, general sales taxes businesses pay remained flat at the local level. Individual income taxes on pass-through business income accounted for 5.5% of total state and local business taxes. Individual income taxes on business income grew 13.2%, the highest rate of any tax in fiscal 2013.
Published by The Business Journal, Youngstown, Ohio.
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