In Fiscal Year (FY) 2013, Delaware collected $4.2 billion in state and local taxes. While this is an impressive sum of money, it tells us little about whether or not the average Delaware taxpayer can afford this level of taxation.
As shown in Chart 1 below, Delaware’s state and local tax burden (tax collections divided by personal income) was the nineteenth highest in the nation for FY 2013 at 10.3 percent—this is right at the national average of 10.3 percent. As shown in Chart 2, Delaware’s tax burden has grown over time by 89 percent to 10.3 percent in FY 2013 from 5.5 percent in FY 1950.
Delaware’s tax burden is one of contrasts in that it has a very high individual income tax burden (3.7 percent, 5th highest), corporate income tax burden (0.8 percent, 4th highest), and all other taxes (4.1 percent, 3rd highest), yet these taxes are offset by not having a general sales tax and a very low property tax burden (1.8 percent, 48th highest).
Delaware has long had a reputation for being an extremely attractive state for corporations to locate in thanks to a much better regulatory and legal environment. As such, Delaware earns significant revenue from the corporate income tax and corporate licenses (classified under “all other taxes”).
However, most of these corporations do not have a significant presence in Delaware which means that the state “exports” many of these taxes onto other state’s residents. We don’t currently make any adjustments for the movement of taxes across state lines, but this would result in a lower tax burden.
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 Delaware—this includes every taxing jurisdiction within the geographic county borders whether it is a city, a special district, or county government itself.
Delaware only has three counties and their tax burdens are as follows: Kent County, DE (1.5 percent), New Castle County, DE (2.2 percent), and Sussex County, DE (2.2 percent).
J. Scott Moody has over 18 years 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 Federalism In Action, Tax Foundation, Heritage Foundation, and The Maine Heritage Policy Center.