January 16, 2003
Fiscal Fact No. 3
Contrary to claims that the Administration’s proposal to eliminate the double tax on dividend income will benefit only a handful of Americans, the latest IRS data show that more than one quarter of all tax returns included dividend income in 2000. That’s 34 million tax returns, representing over 69 million people who claimed $144.6 billion in dividend income.
The percentage of taxpayers claiming dividend income varies greatly by state. Connecticut and New Jersey had the highest percentages of taxpayers claiming taxable dividends: 37.3% and 35.7% respectively. Other states with nearly one-third of their taxpayers claiming dividend income were Colorado (30.4%), Massachusetts (32.4%), Minnesota (32.0%), New Hampshire (30.0%), New York (30.4%), Pennsylvania (30.4%), and Wisconsin (30.8%).
California led the nation in the total amount of dividends claimed in 2000: $18.7 billion. New York was second with $12.3 billion, followed closely by Florida with $11.9 billion. Illinois and New Jersey rounded out the top five with taxpayers claiming $7.1 billion and $5.9 billion in dividends respectively.
Based upon these 2000 returns, Tax Foundation economists have estimated how much each state’s taxpayers would save if dividends are exempted from taxation as the President proposes (see Table below). If dividend income in 2003 matches the 2000 level, taxpayers would save a total of $20.2 billion nationwide – an average of $593 among those tax returns.
The states that would receive the most tax relief per taxpayer include: The District of Columbia ($1,221 per-taxpayer); Nevada ($898); Connecticut ($886); Wyoming ($885); and Florida ($881).
Year 2000 | Year 2003 | ||||
| State | Returns With Dividend Income | Percent of Returns w/ Dividend Income | Total Dividend Income ($thousands) | Estimated Tax Relief from Dividend Tax Exclusion ($thousands) | Savings Per Tax Return with Dividend Income |
| United States | 34,099,783 | 26.2% | $144,673,140 | $20,233,057 | $593 |
| Alabama | 344,337 | 18.1% | $1,301,348 | $152,886 | $444 |
| Alaska | 93,502 | 28.4% | $255,374 | $33,965 | $363 |
| Arizona | 562,837 | 26.1% | $2,422,650 | $312,540 | $555 |
| Arkansas | 209,751 | 18.8% | $1,040,068 | $119,926 | $572 |
| California | 3,909,981 | 26.3% | $18,760,934 | $2,859,955 | $731 |
| Colorado | 636,620 | 30.4% | $2,505,211 | $364,286 | $572 |
| Connecticut | 622,976 | 37.3% | $3,184,709 | $552,192 | $886 |
| Delaware | 109,609 | 29.0% | $378,169 | $50,998 | $465 |
| Florida | 1,973,470 | 26.3% | $11,892,958 | $1,738,382 | $881 |
| Georgia | 800,241 | 22.0% | $3,282,934 | $433,018 | $541 |
| Hawaii | 161,773 | 28.3% | $171,333 | $20,128 | $124 |
| Idaho | 134,351 | 24.0% | $463,083 | $53,955 | $402 |
| Illinois | 1,701,830 | 29.4% | $7,146,114 | $1,050,112 | $617 |
| Indiana | 643,443 | 22.7% | $2,147,396 | $265,375 | $412 |
| Iowa | 397,577 | 29.4% | $1,105,279 | $127,000 | $319 |
| Kansas | 339,549 | 27.8% | $1,204,027 | $159,800 | $471 |
| Kentucky | 346,700 | 19.8% | $1,276,911 | $147,949 | $427 |
| Louisiana | 345,541 | 18.4% | $1,251,115 | $150,731 | $436 |
| Maine | 152,160 | 25.1% | $596,961 | $69,458 | $456 |
| Maryland | 733,391 | 28.6% | $3,028,570 | $407,994 | $556 |
| Mass. | 1,008,963 | 32.4% | $4,798,545 | $802,751 | $796 |
| Michigan | 1,262,007 | 27.3% | $4,691,541 | $616,549 | $489 |
| Minnesota | 763,582 | 32.0% | $2,387,314 | $316,617 | $415 |
| Mississippi | 173,473 | 14.8% | $590,616 | $63,324 | $365 |
| Missouri | 665,460 | 25.9% | $2,433,067 | $308,133 | $463 |
| Montana | 124,028 | 29.2% | $384,355 | $42,061 | $339 |
| Nebraska | 232,926 | 28.8% | $700,433 | $85,559 | $367 |
| Nevada | 197,671 | 20.7% | $1,227,916 | $177,455 | $898 |
| New Hampshire | 191,720 | 30.0% | $824,461 | $122,117 | $637 |
| New Jersey | 1,453,494 | 35.7% | $5,971,989 | $943,644 | $649 |
| New Mexico | 140,281 | 19.3% | $483,089 | $50,021 | $357 |
| New York | 2,610,955 | 30.4% | $12,347,427 | $1,895,482 | $726 |
| North Carolina | 835,750 | 23.0% | $3,208,042 | $392,890 | $470 |
| North Dakota | 83,308 | 27.5% | $190,172 | $21,259 | $255 |
| Ohio | 1,438,884 | 25.8% | $5,168,271 | $636,376 | $442 |
| Oklahoma | 279,477 | 19.1% | $906,470 | $106,374 | $381 |
| Oregon | 428,656 | 27.4% | $1,643,203 | $204,588 | $477 |
| Pennsylvania | 1,763,134 | 30.4% | $7,146,042 | $959,074 | $544 |
| Rhode Island | 135,533 | 27.4% | $493,346 | $63,974 | $472 |
| South Carolina | 355,681 | 19.7% | $1,394,123 | $158,838 | $447 |
| South Dakota | 94,155 | 26.5% | $276,372 | $34,278 | $364 |
| Tennessee | 474,633 | 18.5% | $1,834,325 | $233,708 | $492 |
| Texas | 1,809,168 | 20.0% | $7,937,488 | $1,157,181 | $640 |
| Utah | 193,861 | 20.6% | $651,022 | $72,226 | $373 |
| Vermont | 89,460 | 29.9% | $391,860 | $47,600 | $532 |
| Virginia | 958,021 | 28.7% | $3,768,585 | $516,530 | $539 |
| Washington | 790,470 | 28.5% | $3,431,490 | $521,340 | $660 |
| West Virginia | 138,893 | 18.5% | $469,918 | $51,164 | $368 |
| Wisconsin | 800,505 | 30.8% | $2,502,234 | $307,761 | $384 |
| Wyoming | 64,822 | 27.6% | $385,764 | $57,337 | $885 |
| D.C. | 67,551 | 24.2% | $525,235 | $82,469 | $1,221 |