Analysis using total tax or per capita tax as a measure of tax burden on the citizens of a particular state can be misleading and misinterpreted. Different states use different approaches to taxation, and comparing only the total taxes collected by each state is not enough to understand the economic impact of those states’ taxes. The Census Bureau’s statistics on state tax revenues reflect the taxes a state collects from activity within the state, not necessarily from the individuals within a state. For example, Florida’s general sales and gross receipts revenue is highly reliant on tourism from out-of-state residents; therefore, using a per capita amount for this sales and gross receipts tax would be misleading to describe the tax burden for the state’s citizens. A similar situation occurs in Alaska, where severance tax is paid solely by oil and gas companies that operate within the state and not by the citizens of the state, thus a per capita figure is not reflecting the true burden upon the citizens. If analyzing taxes collected on a per capita basis, this should be interpreted not as a burden on the citizen, but rather a reflection of the portion of tax imposed on behalf of each citizen.
– Cheryl Lee, Edwin Pome, Mara Beleacov, Daniel Pyon, and Matthew Park, U.S. Census Bureau, State Government Tax Collections Summary Report: 2014
Nationwide, state governments collected nearly $866 billion in tax revenue during the fiscal year ending in 2014. The largest source of tax revenue was sales tax (48%), followed by income taxes (41%), licensing taxes (6%), other taxes (4%), and property taxes (2%).
During fiscal year 2014, North Carolina’s state government collected $23.4 billion in taxes. Half of these collections came from income taxes, 43% from sales taxes, 7% from licensing taxes, and 0.3% from other taxes. Property taxes in North Carolina are collected at the county level and were not reported as part of state government tax revenue.
The chart below displays the relative share of state government tax collections in 2014 across four major categories: sales, licenses, income, and other taxes. Property taxes are excluded from this chart because property taxes are typically collected by local government, not state, and are a small or nonexistent portion of overall tax revenue for state governments.