Economic Development

By Harold Moon

Vol. 2, No. 2., 1979, pp. 23

More than half of the 11 Southern states are ranked among the worst in the nation in administering fair and equitable taxes according to a recent report of a public employee’s organization.

Alabama, Mississippi, Tennessee, Texas, Louisiana and Kentucky are ranked 51st, 50th, 48th, 47th, 46th, and 43rd, respectively. Closely following the ten worst states were South Carolina (40th), Florida (33rd) and Virginia (32nd). Only Georgia (13th) and North Carolina (15th) were near the top ten states.

All 50 states including the District of Columbia were ranked in five specific areas of taxation; sales, personal income, business, property and general administration. The ranking measured from 1 (best) to 51st (worst) in a recent published report by the Coalition of America Public Employees entitled Tax Equity in the Fifty States co-authored by Diane Fuchs and Steve A. Rabin.

Louisiana was included among the best in the administration of sales tax, considered the most regressive form of tax. Forty-five percent of the Southern states, however, were ranked among the worse in the sales tax structures.

In personal income tax, the most equitable form of taxation, 27 percent of the Southern states fell into the worst states category.

On an annual basis states have collectively been losing more than $3 billion a year due to poor and uneven taxation of businesses who have cleverly avoided paying an equitable proportion of taxes annually. The uneven taxation of businesses has resulted in individual states placing higher taxes on personal income, property and sales taxes.

Though property tax is a main source of local, not state revenue, and, for the most part, is levied and administered on a local level, the assessing of full property value is sometimes not achieved on an equitable basis. Also, intangible forms of “property” such as stocks, bonds, money on deposit, and securities escape full assessment of value and, thereby, provide loopholes for the wealthy and a “burden on homeowners and renters.” Thirty-six percent of the Southern states have closely monitored and featured legislation to curb abuse in the property tax spectrum: Georgia, Florida, North Carolina, and Kentucky were tied for the ninth position. The top ten is rounded out by Oregon, Wisconsin, Michigan, Maryland, Iowa and California. Forty-five percent of the Southern states ranked in the bottom tier: Louisiana (51st), Montana, Wyoming, Alabama (48th), Texas (46th), Mississippi (46th), Idaho, North Dakota, Delaware and Tennessee (42nd).

Better administration by states of existing tax laws in individual states could lead to eliminating the need for “additional taxes or higher rates”. The close monitoring of “how much is ‘spent’ each year” on tax breaks is one conceivable remedy. Another suggested in the survey, would be for states to cooperate on a joint effort to enforce and administer a multistate tax law where states jointly audit businesses and individuals who must pay taxes in different states. The study estimates that each state would pick up $31 in added tax revenue for every one dollar spent in extra expense.