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New Report on State and Local Tax Burdens


Lee Schalk
April 4, 2014

The good folks at the Tax Foundation have released another eye-opening report with their Annual State-Local Tax Burden Rankings, which “estimates the combined state and local tax burden shouldered by the residents of each state.”

Not surprisingly, New York placed first, with taxpayers shelling out 12.6 percent of their income to pay for state and local taxes, while Wyoming replaced Alaska at number 50 with a burden of 6.9 percent.

Other key findings, according to the Tax Foundation:

  • During the 2011 fiscal year, state-local tax burdens as a share of state incomes decreased on average. This trend was largely driven by the growth of income in all states.
  • In 2011, the residents of New York, New Jersey, and Connecticut had the highest state-local tax burdens as a share of income in the nation. In these states, residents have forgone over 11.9 percent of income due to state and local taxes.
  • Residents of Wyoming paid the lowest percentage of income in 2011 at just 6.9 percent. They replaced Alaska, which had previously been the least-taxed for multiple decades, as the lowest-burdened state in the nation. After Wyoming and Alaska, the next lowest-taxed states were South Dakota, Texas, and Louisiana.
  • State-local tax burdens are very close to one another and slight changes in taxes or income can translate to seemingly dramatic shifts in rank. For example, the twenty mid-ranked states, ranging from Oregon (16th) to Georgia (35th), only differ in burden by just over one percentage point.
  • On average, taxpayers pay more to their own state and local governments (73 percent of total burden). Taxes paid within states of residence decreased on average in 2011, while taxes paid to other states increased, leading to a slight decrease in total burden. Some states deviated from these national trends, however.

The report serves as an excellent reminder for taxpayers to continue the push for tax reform and decreased spending at state and local levels of government. For more from the Tax Foundation or to read the entire report, click here.


 

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