Businesses Pay $447 Billion in State and Local Taxes

New Study Details State-by-State Business Tax Payments

Washington, DC — April 12, 2005 — State and local taxes imposed on businesses exceeded $447 billion in FY2004 – nearly 10% higher than in FY2003 – according to a new study released today by the Council On State Taxation (COST). The study, which shows that businesses pay 43% of all state and local taxes, will help policymakers better understand the true burden of taxes on businesses in their states and localities. (The complete study is available at http://www.statetax.org.)

“State lawmakers are frequently asked to make decisions on complex business tax issues,” said Doug Lindholm, COST’s President & Executive Director. “Unfortunately, lawmakers too often focus on the corporate income tax, which is only one of many taxes businesses pay to state and local government. We hope that our study, which presents a complete state-by-state picture of business taxes, leads to more informed debate on these issues.”

Data Available on State-by-State Basis

“In addition to national figures, we calculated state and local business taxes for each state for FY2000 and FY 2004,” said Bob Cline, co-author of the study and National Director of State and Local Tax Policy Economics for Ernst & Young. “In 26 states, business paid over half of all tax increases over the past four years.”

Property taxes on business property were $165 million in FY2004, accounting for 37% of state and local business taxes. Sales taxes on business purchases inputs and capital equipment totaled $105 billion, 23% of the total. “It has become fashionable over the past several years to allege that businesses aren’t paying ’enough’ taxes to state and local government,” said Mr. Lindholm. “As our study shows, the reality of business taxes is quite different than the perception. The state and local tax burden on business is substantial, and businesses have paid more than 50% of all state and local tax increases since FY2000.”

Contact Information

Joseph R. Crosby

Legislative Director

Council On State Taxation (COST)

Contact via E-mail