Delaware taxes: Top 5 sources of state revenue
New state tax collection estimates are due Monday afternoon. If estimates continue to fall, lawmakers will face a challenge balancing Delaware's next budget before the General Assembly session adjourns on June 30.
But it's worth asking, where does the money come from? How does Delaware pay for public education, Medicaid, law enforcement, prisons and other big-ticket items?
The number one source remains personal income taxes levied on workers here, which generated $1.1 billion in fiscal year 2013. But taxes on gambling, business sales and, perhaps most importantly, out-of-state corporations help pay the bills:
1.Personal Income Taxes; $1.14 billion
- Delaware's top rate, charged on income of $60,000 and above, is 6.6 percent. Gov. Jack Markell and state lawmakers raised the rate from 5.95 percent in 2009 and made the tax increase permanent last year. Collections were hurt by the recession, but personal income taxes remain the single largest source of state tax revenue.
2.Corporate franchise taxes; $776.7 million
- Delaware is known as a the legal home for the majority of Fortune 500 companies. This is one of the benefits. The largest of those corporations pay $180,000 annually to incorporate here, helping keep other taxes relatively low.
3.Abandoned property; $566.5 million
- Another financial benefit of Delaware's corporate franchise, abandoned property includes the unredeemed value of gift cards, uncashed corporate checks, business-to-business credits and dormant stock accounts. If the company is incorporated in Delaware, the money comes here.
4.Casinos/Lottery; $235.3 million
- The state receives 43 cents out of each dollar played in a Delaware slot machine, after winnings. But lawmakers will debate legislation in the final weeks of the legislative session to offer financial assistance to the state's casinos. The potential cost to the state? Lost revenue of $20 million annually. The effort is intended to keep the casinos competitive, and protect the important revenue source.
5. Gross receipts tax; $226.3 million
- Sometimes called Delaware's "hidden sales tax," the tax is levied on the seller of goods and services in the state, rather than the consumer. Markell and lawmakers made some recession-era gross receipts tax increases permanent last year, but carved out reductions for manufacturers to promote job growth.
Contact Jonathan Starkey at 983-6756, on Twitter @jwstarkey or at [email protected]