Personal Tax and Nontax Payments
Personal tax and nontax payments is tax payments (net of refunds) that are made by persons and that are not chargeable to business expense and certain other payments by persons to government agencies (except government enterprises) that are treated like taxes.
Personal taxes includes taxes on income, including realized net capital gains, and on personal property.(1) Also included in personal taxes are personal licenses. Nontaxes includes donations and fees, fines, and forfeitures. Personal contributions for social insurance are not included.
In this chapter, the state estimates of personal tax and nontax payments are described in four sections: (1) personal tax and nontax payments to the Federal Government, (2) personal tax payments except personal property taxes and nontax payments to state governments, (3) personal tax payments except personal property taxes and nontax payments to local governments, and (4) personal property tax payments to state and local governments.
Payments to the Federal Government
The payments by individuals to the Federal Government consist of individual income tax payments, of tax payments on income retained by fiduciaries on behalf of individuals, and of nontax payments.
These payments accounted for about 78 percent of total personal tax and nontax payments at the national level in 2001 (table H).
The national estimates of the personal tax payments and refunds are based mainly on data from the Treasury Department's Monthly Treasury Statement, supplemented with data on withheld social security taxes from the Social Security Administration. The national estimates of the nontax payments are based mainly on data from the Budget of the United States.(2)
Individual income tax payments.–These payments are income tax payments, net of refunds, made by individuals. The gross payments measure represents the sum of the income taxes that are withheld, usually by employers, from wages and salaries, the quarterly payments of estimated taxes on income that is usually not subject to withholding, and final settlements, which is additional tax payments that are made when the tax returns for a year are filed or as a result of audits.
The state estimates of the tax payments and refunds for 1990 and later years were prepared in three steps. First, estimates of the net income tax payments were prepared using tabulations of data reported on individual income tax returns and published in the Spring editions of the IRS's quarterly Statistics of Income Bulletin. For 1990–95 for each state, the first approximation of net tax payments, NTP, was calculated as
NTP = TTL – (EITC – XEITC) – SSSE
Where: TTL = Total tax liability
EITC = Earned income tax credits
XEITC = Excess, or refundable, portion of EITC(3)
SSSE = Social Security and medicare tax payments by the self–employed.
For 1996–00 for each state, the first approximation of net tax payments was calculated as
NTP = IT – (EITC – XEITC)
Where: IT = Income tax, a statistic similar to TTL but excluding SSSE as well as several types of penalties that are not included in the definition personal tax payments.
For all years, the national control total for net tax payments was then allocated to states in proportion to the first approximations.
Second, the estimates of the refunds of income tax payments were prepared. For each state, the first approximation of tax refunds, REFn, for year n was calculated as
REFn = OPTn–1 – XEITCn–1
Where: OPT = Overpayment of taxes.
The national estimate was then allocated to states in proportion to the first approximations.
Third, the estimates of the gross income tax payments were calculated as the sums of the estimates of net income tax payments and the estimates of the refunds.
The 2001 state estimates of net federal income taxes were based on extrapolations of the 1999 and 2000 estimates by the relative changes in the estimates of wage and salary disbursements.
Tax payments on income retained by fiduciaries.–These payments consist of the taxes that are paid on the income that is received by a fiduciary on behalf of an individual and that is retained by the fiduciary rather than distributed to the individual.
Because state–level data for these payments are unavailable, the national estimates are allocated to states in proportion to the sum of the dividends, taxable capital gains and taxable interest received by individuals, as reported on IRS form 1040.
Nontax payments.–These payments consist of the estimates of a variety of payments–such as passport and immigration fees, penalties for the underwithholding of individual income taxes, penalty taxes such as those related to retirement plans, civil and criminal fines, and migratory–bird–hunting stamps–by individuals to the Federal Government. Because state–level data are unavailable, the national estimate is allocated to states by
civilian population. In this annual revision, the payments for 1999–01 were estimated by moving the 1998 state estimates by the movement in Census total population estimates because civilian population incorporating the 2000 Census was not available.
Payments to State Governments
Payments–other than personal property taxes–by individuals to state governments consist of individual income tax payments, of payments for motor vehicle and operator's licenses and for other licenses and taxes, and of nontax payments.
These payments accounted for about 18 percent of total personal tax and nontax payments at the national level in 2001 (table H).
The national estimates as well as the state and local estimates are based mainly on data from the Census Bureau's annual Government Finances files.
Individual income tax payments.–These payments are income tax payments by individuals that exclude refunds. The state estimates are based on the estimates from the Census Bureau's Government Finances and Census' State Government Tax Collections (SGTC). Current year estimates are based mainly on quarterly data for the net individual income tax collections of each state government. These data are published on the Census Bureau's Website. They are supplemented by individual state data.
Payments for motor vehicle and operator's licenses and for other licenses.–Payments for motor vehicle and operators' licenses are distributed by state based mainly on pertinent annual state data from Census Bureau's SGTC supplemented by Federal Highway Administration data. The motor vehicle license fees paid by business are excluded from the SGTC data with state–specific ratios determined from Federal Highway Administration data for 1996.
Payments for other licenses consist of the estimates of the fees that are paid to state government agencies for hunting and fishing licenses for personal, rather than commercial, use and the estimates of the fees for other noncommercial licenses, such as those for the registration of pleasure boats and aircraft.
The state estimates of these license fees are based on data for both the noncommercial and the commercial fees from SGTC.(4)
Nontax payments.–Other nontax payments consists of the payments of fines, fees and forfeitures and donations. The state estimates of each of these types of payments are based on annual data from the Census Bureau's State Government Finances.
Payments to Local Governments
Payments–other than personal property taxes–by persons to local governments consist of the estimates of individual income tax payments, of payments for motor vehicle registration licenses, of payments of miscellaneous fees, and of other nontax payments.
These payments accounted for over 3.4 percent of total personal tax and nontax payments at the national level in 2001 (table H).
The national estimates are based mainly on data from the Census Bureau's annual publication Government Finances.
Individual income tax payments.–The 1992 state estimates of these payments are based on data from the 1992 Census of Governments, as published on the Census Bureau's Website. The estimates for 1993–98 were extrapolated from the 1992 estimates based mainly on data from the 1992–99 files for Government Finances. For 2000 and 2001, data obtained directly from the local finance agencies of New York and the District of Columbia were used to prepare the first approximations for those areas. First approximations for the remaining 11 states with local income tax were estimated using judgmental trends. The national estimates were allocated to states in proportion to the first approximations for 2000 and 2001.
Motor vehicle fees.–The state estimates of fees levied by local governments on owners or operators of motor vehicles–including for the registration and inspection of the vehicles but excluding personal property taxes–are based on state data for the fees from Government Finances.(5)
Miscellaneous fees.–The miscellaneous fees consist largely of the estimates of the payments of the fees for marriage licenses, the fees for the registration of pleasure boats, and the fees for licenses for pets. The state estimates of these fees and taxes are based mainly on data for local government "Other taxes" from Government Finances.
Other nontax payments.– "Other" nontax payments consist primarily of the payments of fees, fines and forfeitures and of donations. The state estimates for these payments are based mainly on the data for "Current charges" and "Miscellaneous general revenues" from Government Finances; these data reflect commercial as well as noncommercial charges.(6)
Personal Property Tax Payments to State and Local Governments
These payments consist of the payments of taxes on the tangible and intangible personal property of individuals.
These payments accounted for about 0.4 percent of total personal tax and nontax payments at the national level in 2001 (table H).
The national estimates of these payments are based mainly on data from the Census Bureau's annual Government Finances.
The state estimates of the payments to state and local governments are combined because the data to allocate these payments to each level of government are not available. The state estimates are based on unpublished IRS data for personal property tax payments, which is provided by individuals who itemize their deductions on their Federal individual income tax returns.
Footnotes
1. Personal tax payments excludes payments of taxes on real property and payments of sales taxes. Taxes on real property paid by persons, except in the real estate business, are excluded because they are considered business expenses that are deducted from both gross monetary rental income and gross imputed rental income in the derivation of net rental income. Sales taxes are excluded because they are included in personal consumption expenditures.
2. For detailed information on the methodology used to prepare the national estimates, see U.S. Department of Commerce, Bureau of Economic Analysis, Methodology Paper Series MP–5, Government Transactions (Washington, DC: U.S. Government Printing Office, November 1988). This publication is available on BEA's Internet site: Go to www.bea.gov and select "Methodologies."
3. XEITC is the total of the amounts by which the EITC exceeds the tax liability on the returns claiming EITC. It is included in the IRS overpayment data, but in the national accounts it is treated as a transfer.
4. These data consist of the payments by both individuals and businesses, and the payments by individuals cannot be distinguished from those by businesses. Thus, the state estimates reflect the assumption that the geographic distribution of the payments by businesses and by individuals is the same as the national split.
5. See footnote 4.
6. See footnote 4.
