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November 4, 2021
2021-2019

Council on State Taxation (COST) releases EY report on state and local taxes paid by businesses in fiscal year 2020

In a newly released report, "Total state and local business taxes, State-by-state estimates for FY 2020," prepared in conjunction with the Council on State Taxation (COST) and State Tax Research Institute (STRI), EY's Quantitative Economics and Statistics Group estimates the state and local taxes paid by businesses in fiscal year 2020 (FY20).

The state and local business tax estimates reflect tax collections from July 2019 through June 2020. The report includes business taxes in its analysis, such as business property taxes, sales and excise taxes businesses paid on input purchases and capital expenditures, gross receipts taxes, corporate income and franchise taxes, business and corporate license taxes, and unemployment insurance taxes.

Key findings

  • Business property tax revenue increased by 3.8% in FY20, a gain of $12.2 billion, and accounted for 39.2% of the total state and local taxes paid by businesses and 76.5% of all local taxes paid by businesses.
  • General sales taxes on business inputs and capital investment totaled $180.1 billion, or 21.5% of state and local business taxes, accounting for 32.5% of all state taxes paid by businesses.
  • Corporate income taxes decreased by 6.3% from FY19 to FY20, with state and local corporate income taxes totaling $71.7 billion, accounting for 8.5% of all state and local businesses taxes paid.
  • Individual income taxes on pass-through business income accounted for 6% of total state and local business taxes.
  • Severance taxes decreased from $15 billion in FY19 to $11.6 billion in FY20.
  • FY20 state and local business taxes equaled 4.5% of the total US private-sector gross state product, which measures the total value of a state's annual private-sector production of goods and services.

Assuming in-state education spending does not benefit in-state businesses, businesses paid on average $3.29 in taxes per dollar of government spending benefiting businesses, meaning businesses paid, on average, more in state and local taxes than they received in benefits.

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Contact Information
For additional information concerning this Alert, please contact:
 
Quantitative Economics and Statistics Group
   • Andrew Phillips (andrew.phillips@ey.com)
   • Caroline Sallee (caroline.sallee@ey.com)
 

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