Interesting Tax Data From the Tax Foundation

The St. Louis Business Journal has a story about a recent study comparing sales tax rates in the 50 states. The study is from the Tax Foundation, one of my favorite think tanks. The foundation’s task is difficult, because compiling local tax data is very complicated, nowhere more so than in Missouri. We are listed as having the 15th-highest combined state and local sales tax rate. Illinois is seventh. Illinois’ average is increased by Cook County having the highest local sales tax rate in the country, so the part of Illinois along the Missouri border is going to be more closely aligned with us. Illinois also has higher property and gas taxes, but a lower state income tax.

This previous study by the Tax Foundation ranks the level of dependency that states have for various types of taxes: sales, income, property, and licenses. Missouri is not in the top 10 for any of the four categories, although it just misses the top 10 for income taxes. Illinois makes the top 10 for property taxes. Tennessee is right at the top for sales taxes, as are a number of other states without income taxes. All of this is important, because Missouri is currently debating the state income tax, and we are hopefully getting a full and accurate debate regarding that issue.

I would like to see a Missouri system in which local government is funded primarily by property, especially land taxes, with a more fair and reasonable system of assessments equalizing and lowering the property taxes that most people pay. State government should be funded primarily through sales taxes, without increased reliance on user fees (like toll roads). At both levels, privatization opportunities should be pursued whenever appropriate. At the local level, more shared provision of services between cities and counties is also needed, and can be a very good alternative to privatization. This is, in my opinion, a recipe for economic growth and fair taxation.

Thanks to Mr. Combest for the original link to the StLBJ.