Taxes

Data: State Squeeze

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Debates about tax policy and the economy usually focus on federal taxes. But even as President Bush argues for the extension of his tax cuts, a study conducted by Ernst & Young for the Council on State Taxation finds state and local taxes on businesses—incluuding property, sales, and corporate income taxes—growing at an accelerating rate. From fiscal year 2000 to fiscal year 2003, in a foundering economy, state and local taxes on businesses grew by 8.3 percent, or 2.7 times faster than nonbusiness taxes, accounting for some two-thirds of state and local revenue growth. And the trend was toward higher growth: Average taxes grew 1.6 percent in 2001, 2.1 percent in 2002, and 5.3 percent in 2003.

The biggest tax hiker was Wyoming, where taxes paid by businesses rose 20 percent. Businesses there paid a whopping 69 percent of total taxes. In only three states—Oregon, Connecticut, and Alaska—were taxes held constant or lowered. Perhaps this trend is not entirely unrelated to that "jobless recovery" we've been hearing about.

CHART (not available online): Increases in Business Taxes, FY2000-FY2003