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State and Local Tax Burdens Are Lower

by | Apr 15, 2014 | Government Entities

iStock_000012914660Large_200_150The burden that state and local taxes place on taxpayers has fallen, after hitting a national high of more than 10 cents on every dollar earned. This is according to the latest available data, which is from 2011.

The national average for 2011 was a tax burden equal to 9.8% of income, according to a report by the Tax Foundation, which looked at how much people pay in taxes, in relation to how much they take in. The total burden from year to year is impacted by policy changes, but also just by changes in income.

The report estimated the tax burden by determining the amount of all state and local taxes paid per capita (including taxes paid in other states) and dividing that by per capita income in each state.

The decrease to 9.8% comes after steady increases in the 2000s. The national burden peaked at 10.2% of income, as wages fell during the 2008 recession and taxes took a bigger share of incomes. The decrease in 2011 is largely because incomes rose that year for the first time since 2008.

New York, New Jersey and Connecticut remained the top tax burden states, with residents paying 12.6 %, 12.3% and 11.9% of their incomes, respectively. South Dakota (7.1%), Alaska (7.0 %) and Wyoming (6.9%) are the lowest tax burden states, with Wyoming’s tax burden dropping more than a full percentage point and leaping to 50th from 46th place last year.

Economist Anirban Basu, CEO of Sage Policy Group in Baltimore, said, “As opposed to many communities looking to shed tax burdens, there may have been less appetite to do so in Maryland and D.C. because at least those areas were tied to strong economies,” Basu said. “My sense is, when we get to the 2013 data, you’ll see different trends.”

Overall, tax burdens across the country varied by a full 5.7 percentage points from the top of the list to the bottom.

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