County and City Income Taxes Clustered in States with Poor Tax Climates

The Tax Foundation has published County and City Income Taxes Clustered in States with Poor Tax Climates, by Joseph Henchman:

[L]ocal-level taxes on wages and income are clustering in areas with poor business tax climates. Philadelphia is one of just six of America's twenty largest cities by population that impose a city- or county- level tax measured by compensation, be it a tax on wages, earned income, or occupational privilege. (The others are New York City, Detroit, Indianapolis, Columbus (OH), and Baltimore.) It should also be noted that Washington, D.C., while imposing a state-like income tax on its residents, has long sought to impose a "commuter tax" on nonresident workers, but is prohibited from doing so by federal law.

Among the states with extensive local-level wage and income taxes are Indiana, Kentucky, Maryland, Michigan, Ohio, and Pennsylvania. With the exception of Indiana, each of these states were in the bottom half of the country in the Tax Foundation's 2008 State Business Tax Climate Index. Indiana, Michigan, and Pennsylvania also are among the ten states with the most outbound moves according to United Van Lines's 2005 Migration Study.