Cities and States Beat the Bushes in Search of New Tax Revenues

Cities and States Beat the Bushes in Search of New Tax Revenues

Mario Anzuoni

Howard Gleckman of the Tax Policy Center notes that state and local authorities have developed a range of “unconventional state and local taxes” to supplement the revenues from the usual income, sales and property taxes. Gleckman traces the origin of these new taxes to the state-run lotteries of the 1970s, which by 2016 were doing more than $80 billion in sales.

The new taxes account for a relatively small share of overall state and local revenue, Gleckman says, but tax authorities are becoming more interested in them every year, and a handful of the levies are now seen as important future revenue sources.

The unconventional taxes Gleckman highlights include:

  • Head taxes applied to large employers, usually within a city. Seattle recently enacted — and then repealed — a head tax designed to pay for low-cost housing.
  • Marijuana taxes could be the money-maker of the future, with 30 states now legalizing pot. The money is substantial: Colorado alone collected $250 million in marijuana taxes and fees last year.
  • Gambling taxes will see a big boost in the wake of the Supreme Court’s recent ruling that opens the door to sports betting in the states. New Jersey enacted legal sports betting just this week.
  • Tourist taxes, because it’s always easier to tax people from somewhere else.