Business Taxes Paid to State and Local Governments Jumps in FY 2003

Businesses across the country paid nearly $400 billion in state and local taxes in fiscal year 2003—a $20.3 billion (5.3 percent) increase over fiscal year 2002, according to a new report from a business tax watchdog organization.

The Council on State Taxation (COST) represents 550 corporations in an effort to "preserve and promote the equitable and nondiscriminatory state and local taxation of multi-jurisdictional business entities," according to its mission statement. The “Total State and Local Business Taxes Fiscal Year 2003 Update” was prepared for COST by Ernst & Young.

The study found that businesses paid 43 percent of all state and local taxes in 2003 with business tax revenue totaling almost twice the individual income tax revenue received by state and local governments. Business tax revenue also outpaced all other state and local non-business taxes by nearly 20 percent, the report stated.

At the same time business taxes paid to state and local governments were on the increase, personal income tax collections were down as unemployment rates climbed.

"The correlation is undeniable. As businesses cope with one tax hike after another, something's got to give—unfortunately payroll frequently takes the hit," Joseph Crosby, COST legislative director, told PR Newswire.

"Clearly, businesses are paying more taxes and having to make hard choices when it comes to investment and expansion," Crosby added. "What’s beneficial to state coffers in the short term, may hurt them in the long run, when the economy improves and corporations compare tax climates in various states, looking for places to grow."

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