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fy2011 business tax burden study

The Council On State Taxation (COST) is pleased to announce the release of the tenth annual study of state and local business taxes. The report, "Total State and Local Business Taxes: State-by-State Estimates for Fiscal Year 2011," prepared by Ernst & Young LLP, shows all state and local business taxes paid in each of the 50 states and the District of Columbia. These 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. Businesses paid $644 billion in state and local taxes in FY2011.

In addition to presenting tax estimates for the most recent fiscal year, the study also examines business taxes over the past business cycle and describes the impact of the recession and recovery on tax collections.

Key findings of the study include:

  • Businesses paid $644 billion in state and local taxes in FY2011, an increase of 4.5% from FY2010.

  • After falling by 0.8% in FY2009 and 0.6% in FY2010, state and local business taxes grew $27.9 billion (4.5%) in FY2011, with total state business taxes increasing by 9.8% and total local business taxes declining by 0.8%. 
  • Property taxes on business property decreased by an estimated 1.5% this year, totaling $244.9 billion in FY2011, or 38.0% of total state and local business taxes.  Sales tax on business inputs and capital equipment totaled $129.7 billion, or 20.1% of business taxes, which is an increase of 5.2% from FY2010.  The property tax and a significant portion of sales taxes paid by business are taxes on capital invested within a state. 
  • Although the corporate income tax has been the focus of significant debate in a number of state legislatures during recent years, FY2011 collections were $46.3 billion, only 7.2% of total state and local business taxes.  Corporate income tax collections grew by 8.5% in FY2011.  Individual income taxes on pass-through business income account for 5.6% of total state and local business taxes and grew by nearly 10.0% in FY2011.

Click here  to view the full study. Questions regarding the study should be directed to   Doug Lindholm .