I still remember 12 years ago when the Council On State Taxation released its first business tax burden study. The study was sound, of course -- undertaken by some of the most gifted economists in the country. But its release was genius. Corporations were being pilloried at the time for not "paying their fair share." There were continual reports of how many corporations were not paying a dime in state income tax (there were a lot). Folks who were concerned with justice and wanted more money were winning the PR battle.
Then COST released its report showing that while corporations were not paying a lot of income taxes, they were paying hundreds of millions of dollars in sales, property, severance, employment, and other state levies. That report changed the trajectory of the debate, perhaps forever. The answer to the charge that businesses were not paying enough became that businesses were actually paying about half of all state taxes.
COST recently released its 12th edition of the report. And it continues to influence the state tax debate as much today as it did in 2002. The new report says that businesses paid $671 billion in state and local taxes in 2013, up about 4 percent over the previous year. But business taxes accounted for 45 percent of all state and local taxes.
I note that the amount of tax paid by "business" is deceptive. Businesses do not pay taxes; people pay taxes. And every dime of the $671 billion was paid by some combination of shareholder, owner, employee, customer, or supplier. Those on the left desperately want the burden to fall on shareholders. But there is growing evidence that in a global economy, the burden falls on employees.
Property taxes account for about 36 percent of all business taxes. That businesses pay property taxes is OK with me. Property taxes are an efficient way to pay for infrastructure, schools, courts, and many services that business needs to succeed. The bad news is that business entities paid about $140 billion in sales taxes. There are few more egregious policies in the tax world than having business entities pay sales tax.
There is a lot of good stuff in the report. And in case you were wondering, businesses paid about $53 billion in corporate income taxes in 2013.