No State Income Tax?

No state income tax? Don't fret--your state is still collecting from you!

Even states without income taxes collect tax revenues--and plenty of them, at that. According to the Tax Foundation's latest state tax collections report, while 31 percent of 1995 state tax revenues came from individual income taxes, 33 percent derived from general sales and use taxes, and another 20 percent came from corporate income taxes, motor fuels excises, and licenses.

Personal Income Taxes.

Three states--Massachusetts, New York, and Oregon--relied on personal income taxes for a preponderance of their 1995 tax collections. (Virginia's income tax collections, comprising 49.1 percent of the state's 1995 total collections, come very close to this mark.) On the other side of the spectrum, seven states--Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming--collected no personal income taxes from their residents in 1995.

General Sales and Use Taxes

Six states--Florida, Nevada, South Dakota, Tennessee, Texas, and Washington--gain most of their revenues from general sales and use taxes. At the same time, five states--Alaska, Delaware, Montana, New Hampshire, and Oregon--took in no sales tax collections.

Corporate Income Taxes

Seven states collected more than 10 percent of their revenue from corporate state income taxes, with Alaska (27.2 percent) and New Hampshire (18.2 percent) topping this category. Four states--Nevada, Texas, Washington, and Wyoming--collected no corporate income tax revenue.

Among the state tax anomalies:

• Along with its state corporate income tax collections, Alaska relied on severance taxes from petroleum reserves for 60 percent of its state tax revenue. It has no state personal income or general sales tax collections.

• Delaware collected about a third of its state revenue from licensing fees.

• After its business profits tax, New Hampshire's biggest revenue-maker was its selective sales tax, imposed on such services as hotels, restaurants, and nursing homes.

• As a proportion of total state collections, Montana relies more on its motor fuel excises than any other state.

Stephen Gold is associate director and director of communications of the Tax Foundation.

For more information ...

Tax Freedom Day 1996: May 7. In 1996, Tax Freedom Day fell on May 7, a day later and the latest ever. (Tax Foundation, April 1996, 3 pp.)

Request PolicyBot document #8082108