Abstract of the Week
Posted at 1 p.m. on Dec. 28, 2012
Gerald Prante and Austin John determined the state-by-state “marginal effective tax rate” for the top income group based on “scheduled law,” including the tax hikes included in the “fiscal cliff” and President Obama’s health care reform law.
“This paper compares state-by-state estimates of the top marginal effective tax rates (METRs) on wages, interest, dividends, capital gains, and business income for tax year 2012 to the rates scheduled for 2013 under scheduled law. Scheduled tax law for 2013 assumes the expiration of the 2001 and 2003 tax cuts and the new PPACA taxes. Overall, the average top METR on wage income is scheduled to increase by approximately six percentage points (41.8 percent to 47.8 perent), while taxes on dividends would increase the greatest (19.0 percent to 47.9 percent). The top METRs on wages, dividends, interest, and partnership/sole proprietor income would exceed 50 percent in California, Hawaii, and New York City.”