State and Local Taxation

February 13, 1963

Report Outline
State and Municipal Tax Prospect, 1963
Trends in State and Local Finance
Reform of State-Local Tax Systems
Special Focus

State and Municipal Tax Prospect, 1963

Current Proposals to increase state and local taxes stand in sharp contrast to administration proposals to reduce federal taxes. As a means of spurring economic growth, President Kennedy has recommended a tax program which, if approved by Congress, would result in a net revenue loss of $2.7 billion in fiscal 1964. The President asserted in his State of the Union message, Jan. 14, that the present federal tax system exerts “too heavy a drag on private purchasing power, profits, and employment.” Some economists believe that the same argument is applicable to taxes imposed by other jurisdictions.

Unless a new economy mood strikes state and municipal leaders, however, taxpayers can expect that any savings in federal taxes in the near future will be largely offset by increases in state or local taxes. On the basis of a nationwide survey of tax proposals, the Tax Foundation estimated, Jan. 21, that the combined state tax take will rise this year by as much as $1.5 billion. New or higher local taxes, especially on real property, will add hundreds of millions of dollars more to the tax load. Pressure to expand the revenues of state and local governments is generated by steadily mounting state and local expenditures. From fiscal 1950 through fiscal 1961, for example, combined annual state-local outlays climbed from $27.9 billion to $66.4 billion—a rise of 138 per cent. “Annual increases in spending, averaging $3.5 billion per year, have been persistent throughout this period.”

Proposals for New or Higher Taxes in States

Scores of major tax proposals are appearing on legislative agenda this year as the states push an intensive search for new revenues to finance increased spending. State tax collections reached an all-time high of $20.6 billion in calendar 1962, compared with only $8.9 billion in 1951, and they are expected to yield a record $22.1 billion in 1963.

ISSUE TRACKER for Related Reports
State and Local Taxes
May 04, 1966  Local Income Taxes and Revenue Needs
Feb. 13, 1963  State and Local Taxation
Dec. 10, 1958  Local Income Taxes
Aug. 16, 1941  State-Local Finance in the War Emergency
Sep. 28, 1937  State Control of Local Finance
Jul. 09, 1932  New Sources of State and Local Revenues
Sep. 16, 1930  Rising Cost of State and Local Government
Nov. 24, 1926  Increasing State and Local Taxation
Jul. 20, 1925  Problems of State and Local Taxation
State and Local Taxes
State, Local, and Intergovernmental Relations