In Fiscal Year (FY) 2013, Arizona collected $22.6 billion in state and local taxes. While this is an impressive sum of money, it tells us little about whether or not the average Arizona taxpayer can afford this level of taxation.
As shown in Chart 1, Arizona’s state and local tax burden (tax collections divided by personal income) was the sixteenth lowest in the nation for FY 2013 at 9.3 percent—this is -9 percent below the national average of 10.3 percent. As shown in Chart 2, Arizona is one of only five states whose tax burden has decreased over time by -2 percent to 9.3 percent in FY 2013 from 9.5 percent in FY 1950 (the other states are: Florida, Louisiana, Oklahoma, and South Dakota).
Arizona’s low state and local tax burden is driven by a low individual income tax burden (1.4 percent, 39th highest), corporate income tax burden (0.27 percent, 33rd highest) and all other taxes (1.2 percent, 47th highest). However, Arizona does have a very high sales tax burden (3.6 percent, 6th highest) partially offsetting the lower tax burdens.
Of course, the tax burdens for local government can vary just as much as they do among the 50 states. As such, we have also calculated the local government tax burden for every county in Arizona—this includes every taxing jurisdiction within the geographic county borders whether it is a city, a special district, or county government itself.
The Arizona counties with the highest local government tax burden include: Gila County, AZ (4.9 percent), Yavapai County, AZ (4.9 percent), and Coconino County, AZ (4.6 percent). The Arizona counties with the lowest local government tax burden include: Apache County, AZ (1.7 percent), Graham County, AZ (2.9 percent), and Cochise County, AZ (3 percent).
J. Scott Moody has nearly 20 years experience as a public policy economist with a specialty in tax policy and has over 180 publications. He has worked for numerous national and state-based think tanks such as the American Conservative Union Foundation, Federalism In Action, Tax Foundation, Heritage Foundation, and The Maine Heritage Policy Center.