Money and Taxes in the Swing Spots
Money tends to be a taboo subject generally – except when it is election time. Then, everyone starts talking about money, and more importantly, taxes. With today’s turbulent economy, the topic seems ever more relevant, so we ask “What do these swing spots look like when it comes to money and taxes?”
If we’ve learned one thing as we publish this fourth blog posting, it is that Fairfax County is always at one end of the spectrum along any indicator – and Youngstown is at the other. It’s no exception when it comes to income. In Fairfax County, the estimated median income in 2007 was $95,590. In Youngstown, it was only $27,438. While 6.64% % of households nationwide are estimated to earn more than $150,000 per year, almost a quarter of all households do in Fairfax. Significantly fewer households fall into this higher income bracket across the other swing spots.
Incomes
| Area | Median Household Income | Median Family Income | % of Households earning less than $25,000 | % of Households earning more than $150,000 |
| Fairfax County, VA | $95,590 | $111,740 | 6.80% | 23.73% |
| Elko, NV | $54,776 | $63,957 | 20.61% | 2.87% |
| Las Cruces, NM | $34,970 | $44,659 | 37.28% | 2.07% |
| Pueblo City, CO | $33,996 | $41,551 | 36.71% | 2.38% |
| Youngstown, OH | $27,438 | $33,288 | 46.28% | 1.05% |
When looking at taxes, however, Youngstown no longer falls at the bottom of the spectrum. It does not have the highest percentage of filers claiming the EITC – or the fewest that are subject to the AMT. Why is this? What makes Youngstown different when it comes to income tax returns?
In 2005 (the most recent year for which tax data is available from the IRS), 16.67% of filers claimed the Earned Income Tax Credit (EITC ) nationally. These swing spots (but for Fairfax), however, represent areas where far higher percentages of filers are considered working poor and claimed the EITC. Over 31% of filers in Pueblo City, for example, claimed the EITC. These numbers seem to have remained relatively steady between 2004 and 2005.
The Adjusted Minimum Tax or AMT is designed to ensure that even higher income households pay a minimum federal tax. Nationally, 2.95% of filers were subject to the AMT. In Fairfax, almost three times that amount (8.75%) were subject to the AMT while in Pueblo City, only .28% were. And, while the percentage of filers subject to the AMT remained relatively constant between 2004 and 2005 in most swing spots, it rose almost 2 percentage points in Fairfax.
Taxes
| Area | % contributing to charity 2004 | % contributing to charity 2005 | % contributing to an IRA 2004 | % contributing to an IRA 2005 |
| Fairfax County, VA | 48.73% | 48.35% | 3.10% | 2.95% |
| Youngstown, OH | 15.24% | 15.41% | 1.65% | 1.53% |
| Pueblo City, CO | 14.35% | 13.82% | 1.99% | 1.23% |
| Las Cruces, NM | 10.28% | 9.52% | 1.49% | 1.31% |
| Elko, NV | N/A | N/A | N/A | N/A |
IRS tax data for Elko will be available in PolicyMap later this week
As you might expect, higher percentages of income tax filers make charitable contributions or contribute to an IRA in Fairfax than do in the other swing spots. Nationally, 31.12% of filers claimed charitable contributions in 2005 and 2.36% made tax-deductible contributions to an IRA.
On a side note, it has always seemed odd to us at PolicyMap that so few households nationwide make tax-deductible IRA contributions and so the numbers in these swing spots did not shock us, but should they? Are too few households saving in IRAs – or are they using retirement savings vehicles that don’t get captured with the IRS return data?
Savings and Charitable Contributions
| Area | % claiming EITC 2004 | % claiming EITC 2005 | % subject to AMT 2004 | % subject to AMT 2005 | Av State and Local Taxes Paid 2004 | Av State and Local Taxes Paid 2005 |
| Fairfax County, VA | 7.38% | 7.19% | 6.58% | 8.75% | $11,147 | $12,288 |
| Youngstown, OH | 28.83% | 29.14% | 0.54% | 0.69% | $5,400 | $5,611 |
| Las Cruces, NM | 30.85% | 30.84% | 0.22% | 0.38% | $3,553 | $3,736 |
| Elko, NV | N/A | N/A | N/A | N/A | N/A | N/A |
| Pueblo City, CO | 31.38% | 31.40% | 0.32% | 0.28% | $3,261 | $3,391 |
IRS tax data for Elko will be available in PolicyMap later this week
Data here is compiled from PolicyMap’s sources and include tax data from the Internal Revenue Service and income estimates from Claritas, Inc.
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Visit Friday for our final article on these Swing Spots, Part 5 – Housing Market:What are housing values and how have they changed over time? How leveraged are homeowners?