In Fiscal Year (FY) 2011, Arizona collected $21.7 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 the charts below, Arizona’s state and local tax burden (tax collections divided by personal income) was the sixteenth lowest in the nation for FY 2011 at 9.7 percent—or 7.3 percent below the national average of 10.5 percent. Arizona is one of only five states whose tax burden has decreased over time by -0.4 percent to 9.69 percent in FY 2011 from 9.73 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 (1.3 percent, 41st highest), corporate income tax burden (0.25 percent, 31st highest) and all other taxes (1.3 percent, 47th highest). However, Arizona does have a very high sales tax burden (3.7 percent, 7th highest) partially offsetting the lower tax burdens.
Note: FY 2012 state and local tax data from the U.S. Census Bureau will not be available until later in 2014 because FY 2012 is part of their comprehensive “Census of Governments” that is done every 5 years (on years ending 2 and 7). Rest assured that Key Policy Data will post the FY 2012 as soon as it becomes available.
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.