New Report Outlines Tax Burdens By State

According to the Tax Foundation’s Annual State-Local Tax Burdens Ranking report, Americans paid 9.8 percent of their collective income in state and local taxes in fiscal year 2011.  The report calculates the state-local tax burden in each of the 50 states.

According to the report, New York had the highest tax burden where individuals paid 12.6 percent of their collective income in state and local taxes, while New Jersey came in second with 12.3 percent, and Connecticut came in third with 11.9 percent.  It is worth mentioning that New York, New Jersey, and Connecticut have been in the top three spots on the list since 2005. The states with the lowest, most competitive tax burdens were Wyoming (6.9 percent), Alaska (7.0 percent), and South Dakota (7.1 percent).

The research in Rich States, Poor States: ALEC-Laffer State Competiveness Index demonstrates that the states with a low overall tax burden have the best track record on economic growth. From 2001 to 2010, the nine states with the lowest tax burden have enjoyed 12.34 percent growth in population, while the nine states with the highest tax burden saw a disappointing 3.78 percent growth in population.  Job growth for the nine states with the lowest tax burden grew by 4.72 percent, while job growth in the nine states with the highest tax burden decreased by 2.89 percent.  Gross state product growth was 58.57 percent for the nine states with the lowest tax burden, and 38.24 percent in the nine states with the highest tax burden. State and local tax revenue in the nine states with the lowest tax burden grew by 120.94 percent, while state and local tax revenue in the nine states with the highest tax burden grew by only 57.46 percent. Overall, the economic evidence shows that state tax burdens have a significant impact on state economic growth.