Extension Communications
3614 Administrative Services Building
Ames, Iowa 50011-3614
(515) 294-9915
4/10/01
Contacts:
Mark Edelman, Extension Economics, (515) 294-3000, medelman@iastate.edu
Del Marks, Extension Communication Systems, (515) 294-9807,
delmarks@iastate.edu
PLAIN ECONOMIC SENSE, Column 402
For release April 10, 2001
Iowa's Rank on State and Local Taxes
By Mark A. Edelman
Extension Public Policy Economist
Iowa State University Extension to Communities
Governing Magazine annually publishes a "State and Local Source Book" that ranks the 50 states in terms of spending and taxes. Given the current debate in Iowa over budget revenue shortfalls and local property tax limitations, it may be of interest for citizens and leaders to review the recently released state rankings for 2001.
Iowa ranks 25th out of 50 states on total state and local tax revenue per capita and 25th in terms of total taxes as a percent of personal income. Because half of the state budget goes to local government aid, those who look at state taxes and local taxes separately are not looking at the big picture. When state and local taxes are combined, Iowa collects $2,521 per person which is $200 per capita below the national average of $2,721 per person based on the Source Book.
Currently Iowa's state and local taxes represent 11.1 percent of our personal income. Iowa state and local taxes have remained in a range of 10.5 and 12.5 percent of our personal income for most of the past three decades. In spite of all the statewide media hype, our state and local tax burden has remained relatively constant and we are currently in the middle of our historic range of taxes relative to our personal income.
Iowa property taxes rank 20th per capita and 18th as a percent of personal income. However we are lower than four of our six neighboring states. According to Governing Magazine, Iowa ranks above the majority of the states, but our average property taxes per capita are actually lower than the national average of $817 per person. Iowa pays $813 per person and this amount is about $200 per person less than four of our neighbors. Property taxes per person are $1,077 in Illinois, $913 in Minnesota, $962 in Nebraska and $1,004 in Wisconsin. South Dakota is lower than Iowa at $722 per person. Missouri has the lowest property taxes of the neighboring states at $519 per person.
Iowa collects $825 per person in state and local sales taxes. The national average is $978 per person. Iowa ranks 35th in sales taxes per person and 34th in sales taxes as a percent of our personal income. Minnesota collects $1,046 per person, South Dakota collects $1,008, Missouri collects $961, Wisconsin collects $953, Illinois collects $941 and Nebraska collects $899. So, Iowa collects less state and local sales tax per person compared to any of the neighboring states.
Iowa's personal income taxes are $612 per person which is $18 per person more than the national average. Iowa's personal income taxes rank 22nd per person and 20th as a percent of personal income. Personal income taxes are higher in Minnesota at $1,020 per person and in Wisconsin at $873. Missouri collects $1 less at $611 per person. Nebraska and Illinois are within $100 at $566 per person and $526 per person, respectively. South Dakota is one of a few states that does not have a personal income tax.
Finally, Iowa's corporate income taxes rank 34th per capita among the states and 36th as a percent of personal income. Iowa collects $77 per person in corporate income taxes compared with $126 nationally. For corporate income taxes, Illinois collects $150 per person, Wisconsin $123, Minnesota $149 and. Nebraska $83 per person. Missouri is about the same as Iowa at $76 per person and South Dakota collects $50 per person. Iowa's low number of corporations per person and Iowa's single factor corporate tax formula are among the reasons for Iowa's rankings in corporate income tax collections.
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