Much discussion of local taxes and the burden placed on North Carolina’s citizens revolves around county and municipal property tax rates. But to get at the larger picture, a measure of the total tax and fee burden imposed by local government is needed.
Using data on property taxes, sales taxes, and miscellaneous taxes and fees from the State Treasurer’s Annual Financial Information Report (AFIR), we calculated county and municipal tax and fee burdens, 1) as a percentage of income (for counties) and 2) per capita (for counties and municipalities). We then constructed a set of rankings to more clearly view the cost of local government. Though this analysis is by no means definitive, it moves citizens one step closer to grappling with this complicated issue.
North Carolina collected almost $12 billion in state revenues for fiscal year 1996-97, including highway fund and highway trust fund taxes. This represented 7.37 percent of the personal income of the state’s citizens. In addition, local governments collected an additional $8.9 billion in property, sales, and miscellaneous taxes and fees, representing another 5.0 percent of the incomes of the state’s citizens. The result is more than a 12 percent state and local tax and fee burden. Federal collections raise the total tax burden on North Carolinians to around 36 percent.
The median total property tax burden by county in North Carolina was 1.93 percent, or about $364 per person, which includes municipal property taxes. Counties ranged from 4.73 percent in Dare County ($975.67 per capita) to 1.08 percent in Alexander County ($211.60 per capita).
The median total local burden by county (including property, sales, and other taxes and fees) as a percentage of income in North Carolina was 4.59 percent, up more than 18 percent from 1992. Counties ranged from a high of 12.28 percent in Dare County (with little change from the 1992 rate of 12.37 percent) to a low of 2.60 percent in Polk County (down almost 6.5 percent from the 1992 level of 2.78 percent).
It is important to note that incomes vary among counties, and this can affect the rankings. Counties of similar size and similar total tax collections can vary as to the burden, because of differences in per-capita incomes. Differences among counties can also reflect the rate and extent of annexation, which places more taxpayers onto municipal tax rolls. Additionally, our analysis excluded intergovernmental revenues, municipal electric charges, and bond proceeds.
Finally, there is a wealth of detail, by county and by municipality, in the appendices accompanying this report. Though some data were not available, overall this report presents a fairly comprehensive picture of the cost of local government in North Carolina.