The Council On State Taxation (COST) is pleased to announce the release of our seventh annual study of state and local business taxes. The report, prepared by Ernst & Young LLP, shows all state and local business taxes paid in each of the 50 states. The taxes include business property taxes, sales and excise taxes on business inputs, gross receipts taxes, corporate income and franchise taxes, unemployment insurance taxes, pass-through business taxes and other state and local taxes that are the statutory liability of business taxpayers.
Despite the initial impacts of the recession that officially began in December 2007, business taxes grew 2.7% in fiscal year 2008 to a total of $590 billion nationwide. The business share of total state and local taxes remained constant from FY 2007 to FY 2008 at 44.1%. Because of the cyclical volatility in business taxes, the business share of total state and local taxes is expected to fall until the economy begins to recover.
The state-by-state estimates reveal significant variation in the share of state and local taxes paid by businesses across the US. The business share is determined by a state’s overall tax structure, the composition of its economy and the types of business taxes levied. The study also examines the level of state and local business taxes as a share of private-sector economic activity in each state, and the amount of business taxes compared to government services received by business. State and local business taxes exceed the estimated value of state and local public services benefiting business by 83%, which is an increase of 5% from FY2007. Business taxes exceed the estimated value of state and local public services provided to business in every state.
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. Questions regarding the study should be directed to