July 16, 2007
New Primer on Investment Taxes Shows Which States Pay the Most
Contact: Nate Bailey (202) 464-5102
Washington, DC, July 13, 2007 - Retirees and high-income workers will bear the brunt of any new taxes on investment, and those people are concentrated in a handful of states, according to a new Tax Foundation primer on capital gains and dividend taxation.
While the residents of California, New York and Florida earn 18 percent of the nation's wages, they earn 36 percent of the nation's capital gains and dividends. Some smaller states like Wyoming, Nevada, Connecticut and Arizona also have very high investment income per tax return, either because many retirees live there, as in Arizona, or because of pockets of high-income people, as in Jackson Hole, Wyoming.
Senator Clinton and several other presidential candidates have taken up billionaire Warren Buffett's call for heavier taxes on capital gains and dividends, possibly even taxing them as wages.
"That would be a radical change, not just from current tax policy but from the entire history of our income tax," says economist Gerald Prante, author of the new report in the Tax Foundation Fiscal Fact series, No. 90, "As Presidential Candidates Target Investment Income for Higher Taxes, Which States Stand to Lose Most?"
"Of all the Bush tax cuts, the ones on investment income seem to have riled Democratic candidates the most," says Prante, "but that's ironic because when the 50 states are ranked by investment income, each of the bottom 10 states voted for Bush in 2004, and 13 of the top 20 voted for Kerry."
See Fiscal Fact No. 90 at http://www.taxfoundation.org/publications/show/22481.html
The nonpartisan, nonprofit Tax Foundation has monitored tax policy at the federal, state and local levels since 1937. Best known for its annual calculation of Tax Freedom Day®, the Tax Foundation is a nonprofit, nonpartisan 501(c)(3) organization.
