This week the Tax Foundation is featuring two new maps which pull data from a Fiscal Fact released last week, “Individual Tax Rates Impact Business Activity Due to High Number of Pass-Throughs,” and look at the top marginal tax rates for sole proprietorships and S-corporations throughout the states. In his study, economist Kyle Pomerleau explains that more than 30 million pass-through businesses file their taxes at the individual rate, and why a large percentage of those businesses have a marginal tax rate exceeding 40 percent.
According to the Tax Foundation: The map [above] is not examining the effective rates of businesses in the top bracket, but rather, the top marginal tax rate on (S-Corporations/Sole Proprietorships) in each state. A “marginal” rate is the amount that is taxed of the next dollar of income earned by pass-through businesses in each state’s highest tax bracket. These rates reflect the sum of federal, state, and local income taxes (minus the state and local tax deduction); self-employment taxes; and the limitation on itemized deductions.
View the Tax Foundation map archive here.
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Founded in 1937, the Tax Foundation is the nation’s leading independent, non-partisan organization providing sound research and analysis on federal and state tax policy. The Tax Foundation is a 501(c)(3) non-profit and our offices are located in the National Press Building in Washington, DC.