Delaware has the Nineteenth Highest Tax Burden in the Nation for 2013

Apr 16, 2015

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 State and Local Tax Burden Rank 2013.jpg

Delaware’s tax burden is one of contrasts in that it has a very high individual income tax burden (3.7 percent, 5^th highest), corporate income tax burden (0.8 percent, 4^th highest), and all other taxes (4.1 percent, 3^rd highest), yet these taxes are offset by not having a general sales tax and a very low property tax burden (1.8 percent, 48^th 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.

#Delaware #taxburden has grown 89% between FY 1950 to 2013 to 10.3% from 5.5%. (click to tweet)

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).

Click here to view tax burden data by state, county, type of tax, and for years 1950 to 2013.

Delaware State and Local Tax Burden 1950 to 2013.jpg

J. Scott Moody

Scott has nearly 20 years of experience as a public policy economist. He is the author, co-author and editor of over 180 studies and books. His professional experience also includes positions at the American Conservative Union Foundation, Granite Institute, Federalism In Action, Maine Heritage Policy Center, Tax Foundation, and Heritage Foundation.