March 23, 2000 -- Because the federal income tax is the biggest and usually the first tax we see listed on our pay stubs, we naturally tend to focus on it.

But state government takes a bite out of our spending money, too. Bankrate will help you stay on top of what your localities are collecting -- income, sales, personal property or investment taxes, or often a combination of all.

Here's a look at some recent tax actions across the nation.

Studies show state tax give-and-take
When it comes to money, what states give they also take, according to two recent state taxation studies.

Nineteen states enacted significant tax cuts last year, according to the Center for the Study of the States in Albany, N.Y., with the most popular cut being a one-time rebate rather than a permanent tax cut. Overall, state collections were reduced by these cuts and rebates by $7.6 billion, the Center says, with almost $3 billion from sales tax reductions, $2.1 billion from personal income tax cuts and $1.6 billion from lower property taxes. The remaining cuts were in business and other taxes.

The Center's report defined significant tax cuts as those that reduced a state's general fund by at least 1 percent. The largest tax cuts, as a percentage of general fund money, were 18.5 percent enacted in Minnesota, 14.9 percent in Colorado and 8.4 percent in Wisconsin.

States apparently were able to hand out these cuts last year thanks to an earlier growth in collections found by the Washington, D.C.-based Tax Foundation. A special report by the Foundation says state tax and fee collections grew by 7.1 percent between fiscal years 1997 and 1998.

In addition, the report says state governments' tax collections grew faster than their taxpayers' personal income by an average of 0.35 percent over the last 10 years after adjusting for inflation. In 1998, the trend accelerated with state tax collections exceeding growth in personal income by 1.4 percent.

The Foundation found that estate and gift tax collections were the fastest growing state collections, rising a combined 17.4 percent. Individual income taxes rose at an 11.1 percent clip in 1998.

Massachusetts, New York, Oregon and Virginia relied on personal income taxes for over half of their tax collections in 1998, the Foundation reports. Conversely, seven states -- Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming -- collected no personal income taxes from their residents, and Tennessee and New Hampshire only collected individual income taxes on dividends and interest.

On the corporate taxation side, four states depended on business taxes for more than 10 percent of their total 1998 cash. Alaska at 23.2 percent and New Hampshire at 23.4 percent topped this category. Four states -- Nevada, Texas, Washington and Wyoming -- have no corporate income tax.

Lower auto tag fees to be protected
SEATTLE -- Just days after a court struck down a voter-approved cap on auto license fees, state legislators put the electorate's wishes into legislation.

Initiative 695, passed overwhelmingly by Washington voters in November, requires that all state government taxes, fees and charges be approved by a public vote. The plan also reduced vehicle licensing charges to a flat $30 fee. On March 14, a King County Superior Court judge declared the initiative unconstitutional.

The initiative was challenged by several port districts that would lose tax money. The state is appealing the ruling, but the new legislation could make the scheduled June 29 hearing moot.

The Washington Senate voted 39-9 to codify the initiative, and the House is expected early next week to pass legislation protecting the $30 auto tags, regardless of what the State Supreme Court decides. Gov. Gary Locke says he'll sign the bill.

The Senate vote marked the first major legislation passed since lawmakers convened a special session earlier in March.

Maryland tax shift upsets many filers
ANNAPOLIS -- Marylanders got a state tax cut in 1999, but about half of the state's 2 million taxpayers have discovered this filing season they must shell out more to local tax collectors.

The higher local payment comes thanks to General Assembly efforts to simplify state tax calculations. Seniors, singles and couples with no children are likely to owe more local income tax than in 1998. On average, state officials estimate, single taxpayers will pay about $23 more now and $36 a year more by 2002.

The comptroller's office says that overall, these taxpayers still are paying less in combined state and local taxes than they did before the state tax reduction. The jurisdictional shifting of the payments, however, has upset many who have called Annapolis and local politicians to complain.

The confusion started last tax filing season, the first year of a phased-in, 10 percent state tax cut passed by the legislature in 1997. Because local taxes were not cut at the time, taxpayers had to do separate calculations to figure local and state taxes. The dual computations generated a lot of taxpayer complaints, errors and confusion, according to David F. Roose, director of revenue estimates for the state comptroller's office.

The General Assembly fixed the problem by changing the way local taxes are calculated. Rather than tying local taxes to the state tax owed, the Assembly made local taxes a percentage of a taxpayer's income. Figuring the local tax without any connection to the state tax is easier, but it eliminated a wrinkle in which the tax rate for the first $3,000 of income was significantly lower.

The legislature increased the amount that can be deducted from local taxable income for every dependent to counter the quirky first-$3,000 tax increase. But that doesn't help taxpayers without children or other dependents, who now pay a little more in local taxes.

Sen. Barbara A. Hoffman, chair of the Senate Budget and Taxation Committee, said lawmakers knew the change would mean more local income tax for some. "It's not a whole lot, but it's annoying," Hoffman said. "Some people are paying more, and some people are paying less," she said. "It depends on how many dependents you have."

Workers from neighboring states boosting Illinois tax collection
SPRINGFIELD -- Indiana workers beware. Neighboring Illinois tax officials still are looking to collect $20 million in income taxes from you this year.

For the last two years, Land of Lincoln officials have boosted their treasury with $53.75 million collected from Indiana and Wisconsin residents who commute to jobs in Illinois.

The collection effort came after Illinois discovered it was losing millions by not collecting income taxes from neighboring state residents who work in the state. Previously, these workers escaped Illinois tax scrutiny thanks to arrangements set up in 1972 with Indiana and Wisconsin allowing them to pay income taxes where they live rather than where they work. Illinois officials assumed Indiana and Wisconsin were providing equal numbers of jobs for Illinois residents. However, closer examination showed that there are far more Illinois jobs for neighboring workers.

Illinois threatened to break the tax deals, forcing residents to file returns in two states unless Indiana and Wisconsin reimbursed Illinois for lost tax money. Wisconsin agreed, paying Illinois $5.5 million in 1998 and $8.25 million last year.

Indiana objected, however, and Illinois negated the tax deal, forcing more than 100,000 workers to file tax returns with both states. Illinois officials say income tax collections have risen by $20 million a year since the arrangement was negated, with 60,300 Indiana residents filing Illinois income tax returns. Indiana gets taxes from 40,200 Illinois residents.

The states are working to reinstate the deal by next January so residents can resume filing a single state income tax return. But Illinois officials say that will happen only if Indiana agrees to join Wisconsin in making annual payments to the Illinois treasury.