Saturday, July 23, 2011

Tax Burden by State


Top TenTaxes Paid By Residents, % of IncomeTaxes Paid by Non-Residents (%)
1New Jersey12.220.5
2New York12.128.6
3Connecticut12.019.9
4Wisconsin11.022.1
5Rhode Island10.729.1
6California10.617.5
7Minnesota10.324.5
8Vermont10.237.9
9Maine10.135.3
10Pennsylvania10.123.7
Average10.925.9
Lowest Ten
1New Mexico8.441.0
2Louisiana8.246.0
3South Carolina8.134.0
4New Hampshire8.043.6
5Texas7.936.6
6Wyoming7.870.1
7Tennessee7.636.3
8South Dakota7.644.0
9Nevada7.547.5
10Alaska6.379.5
Average7.747.9

24/7 Wall Street -- "Different states tax their residences at different levels. In some states, like New Jersey, residents pay 12.2% as a percentage of their income. In others, like Alaska, they pay as little as 6.3% (see table above) . 24/7 Wall St. reviewed a report recently released by the Tax Foundation to identify the states where residents paid the most and least in state and local taxes as a percent of income.

The amount varies widely as not all states have the same sources of revenue. Some get more from business levies than others. Some have a statewide sales tax. Some cities and towns tax property based on value, while others don't. The issue of what people are taxed at the state and local level is complex, among other reasons, because states often receive a large amount of their tax receipts from sources other than the simple payments of state residents.
The most important reason for the variation is that some states generate a significant amount of their tax revenue from businesses and out-of-state residents, thereby minimizing the burden of taxes borne by residents. Alaska, for example, gets 80% of tax receipts from such sources. State residents get the equivalent of a subsidy from some of the world's largest oil companies.

Conversely, states with low out-of-state business receipts must collect a higher percent of taxes from their residents. This is the case in New Jersey, which gets only 20% of its tax receipts from such sources. As a matter of fact, most of the really large companies in the region are on the other side of New Jersey's northeast border in New York State, thereby creating a higher burden on residents.

The Tax Foundation's report divides state tax revenue into two categories: the amount contributed by residents, including income, property and sales tax, and the amount contributed by non-residents, including taxes paid by out-of-state businesses and taxes collected by in-state business and paid by out-of-state residents."

MP: The table above shows that for the ten states with the highest tax burden on residents, the average tax rate as a share of residents' income is 10.9% and they pay 74.1% of the taxes collected; for the ten states with the lowest tax burden on residents, the average tax rate is only 7.7% because almost half of total state taxes are generated from non-residents (47.9%).  

28 Comments:

At 7/23/2011 2:03 PM, Blogger Benjamin said...

The take-away?

You gotta raise taxes if you want good food.

 
At 7/23/2011 2:15 PM, Blogger Rufus II said...

Or, live in a sparsely populated, wilderness State, on top of an ocean of oil, and elect Sarah Palin as your Governor.

 
At 7/23/2011 2:20 PM, Blogger Buddy R Pacifico said...

The U.S. dollar is only worth sixty-four cents in Vermont if you are a visitor -- sheesh.

 
At 7/23/2011 2:25 PM, Blogger Buddy R Pacifico said...

The U.S. dollar seems to be worth only twenty-three cents in Alaska forn out of staters -- double sheesh.

 
At 7/23/2011 3:26 PM, Blogger Benjamin said...

Evidently, the low tax rates are not low enough: Palin quit mid-term (after taking an oath of office to voters) and moved to Arizona.

You know, once you have money, are you really gonna live through another Alaska winter and eat hillbilly beans-and-hot dogs again? The farting indoors gets old....

 
At 7/23/2011 4:53 PM, Blogger Pluto said...

if you see the difference between the two averages for resident, it is not huge so It no very worth to move from a state to another to pay less taxes.

 
At 7/23/2011 6:27 PM, Blogger Craig said...

It no very worth to move from a state to another to pay less taxes

Just another illustration of how averages are so misleading. Pick a pair of states and the difference will suggest you're wrong.

 
At 7/23/2011 9:03 PM, Blogger Rufus II said...

All that money in Alaska comes from oil company royalties.

 
At 7/23/2011 9:38 PM, Blogger Tiger Coach said...

Question... I have been vacationing in TN for the past two weeks and noted a 9.75% sales tax. In my humble opinion this tax unduly hits the middle and poor classes... Others have argued that it affects all equally... Your thoughts?

For certain the governor of this state has initiated a race to the bottom with merit pay provisions for teachers... maybe gets him re-elected, but I noted that the middle class in this state cannot take another beating on a public service program like education again...

 
At 7/23/2011 9:48 PM, Blogger James said...

Table C. States with statistically significant employment changes from May 2011 to June 2011, seasonally adjusted is here

Four of these high tax states California, Minnesota, Vermont, and Wisconsin made the list and created 54,300 jobs in June 2011.

Five of these low tax states Alaska, South Carolina, South Dakota, Tennessee, and Texas made the list and created 33,000 jobs in June 2011.

Looks like if you need a job you should look in a high tax state.

I have read a lot of babble on this blog about companies leaving California because of high taxes and regulation but the BLS says California created more jobs in June than the national as a whole. The national gain of 18,000 jobs would have been negative without California’s contribution of 28,800. Taxes and regulation are indeed impediments to job creation but other things are more important and the high tax states generally have more of the things that are more important.

 
At 7/23/2011 10:02 PM, Blogger gadfly said...

Tiger Coach doesn't understand that sales taxes accumulate highest to those who spend the most. To paraphrase Fritz Hollings, "there is a whole lot of consumin' goin' on out there" by the people with the most money to spend. Also TN, for all intents and purposes, does not have an income tax -- so the sales tax is the main source of revenue for the state.

 
At 7/23/2011 10:15 PM, Blogger Larry G said...

a more clear picture would be to see the breakdown between sales, property and income...

Some states do benefit from things like royalties on oil and companies that sell products and services out of state.

 
At 7/23/2011 10:23 PM, Blogger Larry G said...

" They are not trust funds in the real sense of the word"

they are not trust funds in the sense of your world.

They are the very same trust funds that were created 60+ years ago to function the way they function because SS/FICA was created as a pay-as-you-go program with the trust funds to hold any overages that would be available in years when FICA did not fully fund SS.

that's the truth and the reality for those that want to understand it.

ALL of the govt trust funds are secured by treasury securities.

that's another fact.

demographics ARE going to affect SS like they are ALL insurance and annuities - ANYWHERE in the world where people are living longer and there is a boomer effect.

but this is not why we have a deficit and debt RIGHT NOW.

WHY DO YOU FOCUS on SS which is not a problem right this minute instead of the things that ARE a problem RIGHT NOW?

I think you do because you are a zealot... more interesting in killing SS than in dealing with the deficit and debt.

you have no credibility here...

you're playing fan dance games...

you keep arguing SS which is not in major deficit and never has been for 60+ years .... and blathering on and on about "trust funds" of which there are a dozen or more than work similarly to SS and not once have you called any of those funds "broke" or having 75-year horizon unfunded liabilities?

your whole shtick here is bogus to the bone and even though you say you don't care for either party your rhetoric is tea party classic...your anti-Obama attitudes ...telling indeed.

 
At 7/23/2011 10:38 PM, Blogger Larry G said...

" That is a default"

It's a TECHNICAL default if NOTHING is done between now and 2037.

Once again - WHY are you concentrating on this when it's not part of the CURRENT Debt/Deficit?

Shouldn't the PRIORITY be the CURRENT DEFICT & Debt - FIRST and if we want to fix SS - do what EITHER ONE of the two Deficit Commissions recommended?

why are you concentrating on this?

 
At 7/23/2011 10:58 PM, Blogger Che is dead said...

"Another avalanche of stupid from "Larry G".

Thanks for playing.

 
At 7/24/2011 2:37 AM, Blogger Ron H. said...

"Taxes and regulation are indeed impediments to job creation but other things are more important and the high tax states generally have more of the things that are more important."

Like what?

 
At 7/24/2011 3:15 AM, Blogger Ron H. said...

James,

You need to do better than that. You cant just mash two unrelated sets of numbers together then cherry pick numbers you think show a correlation. You haven't even adjusted for state population sizes or number of current jobs. Your assertion is meaningless.

 
At 7/24/2011 4:26 AM, Blogger James said...

"Taxes and regulation are indeed impediments to job creation but other things are more important and the high tax states generally have more of the things that are more important."

Like what?



The infrastructure needed to create and maintain a skilled workforce, closeness to markets, power supply, raw materials, capital, and most of all customers. Generally the high tax states do better on these things than the low tax states. High tax states buy more goods and services than low tax states. That creates opportunities for business and hence jobs. Do not forget the multiplier effect from spending those taxes.

California’s university system, like those in other high tax states, costs a lot of money to operate. If your business locates in California you will pay for it. The upside is that it makes available to you college graduates trained at world class institutions.

 
At 7/24/2011 4:35 AM, Blogger James said...

You haven't even adjusted for state population sizes or number of current jobs.

Actually I did, but did not say anything about it. You can do that for yourself. The data are in table C of the link. You get the same answer. High tax states created more jobs than low tax states.

 
At 7/24/2011 5:40 AM, Blogger Ron H. said...

James,

"Actually I did, but did not say anything about it. You can do that for yourself. The data are in table C of the link. You get the same answer. High tax states created more jobs than low tax states."

That still doesn't allow you to attribute causation to the cherry picked numbers you have selected. This is just silly.

"The infrastructure needed to create and maintain a skilled workforce, closeness to markets, power supply, raw materials, capital, and most of all customers. Generally the high tax states do better on these things than the low tax states."

Those things ALLOW for higher taxes, they aren't CAUSED by them.

You will note that only 14% of California's GDP derives from manufacturing, construction, mining, and agriculture. The rest is services and government.

Multiplier from government spending? It's negative. If it was positive, we should pay 100% of our earning in taxes, to take advantage of the prosperity produced by government. You don't really believe that, do you?

 
At 7/24/2011 7:53 AM, Blogger Mark J. Perry said...

James: That BLS report is for payroll employment over just the last year. Looking at Total Employment in Texas and California over a longer period from January 2008 to June 2011, we find that California has LOST 1.1 million jobs (-1,113,232) and Texas has GAINED more than a quarter million jobs (+227,983).

 
At 7/24/2011 8:52 AM, Blogger bix1951 said...

A little off topic
but I have heard the
INSURANCE burden in California is bigger than the government burden
the expense on all forms of insurance totals more than the cost of government?
Maybe?
fire insurance
auto insurance
health insurance
life insurance
etc.

 
At 7/24/2011 9:54 AM, Blogger Larry G said...

are we not conflating taxes on individuals and workers with taxes on business?

If you have a good business climate and it provides a lot of jobs, can you not (in theory) tax the wazoo out of the workers but the company still makes wonderful profits...unaffected by the tax on workers?

Not advocating this.. but pointing out what appear to be apples and oranges.

 
At 7/24/2011 9:55 AM, Blogger Larry G said...

re: Texas and California.

Let's see the history of job creation between the two for the last 10, 20 years.

Let's see a chart with individual tax burden vs that state's job creation over 10 years.

 
At 7/24/2011 12:33 PM, Blogger Ron H. said...

"are we not conflating taxes on individuals and workers with taxes on business?"

No.

"If you have a good business climate and it provides a lot of jobs, can you not (in theory) tax the wazoo out of the workers but the company still makes wonderful profits...unaffected by the tax on workers?"

No.

 
At 7/24/2011 3:13 PM, Blogger geoih said...

"Conversely, states with low out-of-state business receipts must collect a higher percent of taxes from their residents."

Why do you assume taxation is a zero sum game?

 
At 7/25/2011 2:08 PM, Blogger Sam Weatherby said...

Am I the only one who differentiates between royalties and taxes?

 
At 7/25/2011 11:01 PM, Blogger Ron H. said...

"Am I the only one who differentiates between royalties and taxes?"

Is it possible to differentiate when the royalty or tax is paid to a government entity? They have the same effect.

 

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