The District of Columbia government annually produces a report on the burden of state and local taxes in the largest city in each of the 50 states plus Washington, D.C. The methodology is to take hypothetical families of four at selected income levels and estimate the burden of state and local income, property, sales and auto taxes. The latest data from the D.C. report (see figure) shows that in 1995:

• A family of four earning $50,000 per year paid an astonishing 22.4 percent of its income in state and local taxes in Bridgeport, Conn., making it by far the most heavily taxed city in America.

• By contrast, in New York, our largest city and one long known for its heavy taxes, this family paid only 13 percent and those in Washington paid 9.2 percent.

• But these are still above the weighted average tax rate for all 51 cities of 8.6 percent and the median (midpoint) of 8.1 percent.

• The lowest taxed of the 51 cities was Anchorage, Alaska, where a family paid just 2.7 percent of its income in taxes.

A key factor in the lowest-taxed cities was the absence of any income tax in these states, and in the case of Alaska no sales tax either. Thus families paid 3.6 percent in Cheyenne, Wyo.; 4.6 percent in Las Vegas; and 4.8 percent in Jacksonville, Fla.

Of course, the tax burden varied a great deal depending on a family's income level. In the study, progressivity is measured by the ratio of taxes on a family making $25,000 to one making $100,000.

• The city of Minneapolis had the most progressive tax system, while Las Vegas had the least progressive system.

• In Minneapolis, the lower-income family paid 6.4 percent, while the higher-income family paid 10.8 percent.

• By contrast, in Las Vegas the second family actually had a lower tax rate than the first family: 4.7 percent versus 5.7 percent.

The study also notes that Washington had the highest cigarette taxes of any city in the U.S., and only 7 cities had higher income taxes. On the other hand, taxes on beer, wine and liquor in Washington are among the lowest in the country.

The broad lesson that is drawn from a review of taxes in 51 cities is that with the apparent exception of Bridgeport, competition tends to keep taxes from getting too far out line. It is also clear that the opportunities for income redistribution are very limited at the local level. It is too easy to escape high, progressive taxes by moving elsewhere.

Source: Bruce Bartlett, Senior Fellow, National Center for Policy Analysis, March 3, 1997.