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State Revenue: Sales, Property or Income Tax?

  • Apr 17, 2012 | Will Frei

Sales, property and income tax help make up the meat and potatoes of state revenue.  Yet each state levies these taxes in different ratios, and some don’t even have all three.

Avalara, a SaaS company that automates sales tax compliance, has an online poll where they ask which of these taxes you think your state should use to generate revenue. Vote in their online poll for a chance to win a $50 gift card  (to help you pay all those state taxes).

Whenever a state lowers or eliminates one of these three taxes, the others inevitably seem to rise. Case in point: Pennsylvania is currently considering HB 1776, a bill that would eliminate school property tax. The bill proposes to make up the loss in revenue through sales tax. In the words of HB 1776, “Any property tax reform will involve shifting the levy from one type of tax to another. There’s no free ride.”

Shifting from one tax to another can be like a game of hot potato: no one wants the tax burden to fall into the wrong hands. You can certainly hear this in the recent debates over the proposal to eliminate Kansas income tax. For instance, Erica Williams, policy analyst for the Center on Budget and Policy Priorities claims that “If Kansas gets rid of the income tax the state will likely find itself . . . raising other taxes on middle- and low-income families . . . .”

So what about your state? What is the right ratio of sales, income and property tax? Go vote in the poll and get a chance to win a $50 gift card.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Will Frei
Avalara Author Will Frei
Will Frei covers sales tax news including best practices, legislation and sales tax technology. He is the Social Media Manager at Avalara.