Tax Day - It's Here.
Effective Business Tax Rate
We dread it more than any other day. It has been ranked as one of the top three most stressful days of the year. We collectively spend over $165 billion dollars complying with it. And when you send in your forms, you are one of more than 131 million to be processed. It’s Tax Day.
The very first U.S. income tax was levied in 1861 to help finance the Civil War and was three percent of income over $800 (the equivalent of $20,500 today). However, the most common form used – the 1040 – wasn’t introduced until 1913, and was just three pages long (with instructions). By contrast, the instruction book for the current 1040 comes in at 207 pages, with an additional 13 pages of tax tables.According to the Tax Foundation, in 2014, Americans will spend more money on federal, state and local taxes ($4.5 trillion) than they do on housing, clothing, and food COMBINED.
In Florida, we are fortunate to be one of only seven states without a state-levied income tax. That fact is a major factor in Florida’s current ranking as the fifth best tax climate in the U.S. However, with the fourth-largest population (and about to pass New York and become the third largest), the overall burden of taxation must fall somewhere.
The Sunshine State relies heavily on a combination of property taxes (which average $1,368 per capita), a six percent sales tax (with local options to increase in half-percent increments), various use taxes, and a corporate income tax on net income over $50,000.
So, how does the Sunshine State rank in business taxes in comparison to other states? Florida businesses pay approximately 13.4 percent of their gross profits in taxes each year – one of the largest shares in the U.S. In addition, when comparing business taxes to state GDP, 6.1 percent of Florida’s GDP is made up of business taxes – the 5th highest share in the U.S.