NCPA - National Center for Policy Analysis

THE BEST AND WORST STATES FOR TAXES

April 1, 2008

We pay Uncle Sam the same no matter where we live, but property, gasoline, tobacco, sales and state income taxes are all over the map.  The differences can be extreme.  An Alaskan keeps 7 cents more of every dollar than a Vermonter, once cities and the state have grabbed their share.  Factor in federal tax and the gap grows even wider.  Those who earn more money generally pay a greater percentage of it in federal taxes, so states with a greater percentage of highly paid workers end up paying more, writes Scott McCredie in MSN.com.

For example:

  • The state in which residents pay the most in combined state, local and federal taxes, per capita, is Connecticut (38.3 percent), followed by New York (37.1 percent), New Jersey (35.6 percent) and Nevada (35.2 percent).
  • Oklahoma residents pay the least (27.8 percent), followed by those in Alabama (28 percent) and Alaska (28.1 percent).

We're all paying more, though:

  • The U.S. average for state and local taxes in 2007 was 11 percent, up from 10.8 percent in 2006.
  • The average combined state, local and federal tab for 2007 was 32.7 percent, up from 32.3 percent in 2006 and 30.7 percent in 1980.

There are 50 states in the union and, it seems, 50 formulas for collecting taxes:

  • Only seven states -- Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming -- don't assess income taxes.
  • New Hampshire and Tennessee have income taxes on just dividends and interest; these states balance the lack of income taxes with other taxes, notably sales taxes.

Source: Scott McCredie, "The best and worst states for taxes," MSN.com, March 27, 2008.

For text:

http://articles.moneycentral.msn.com/Taxes/Advice/TheBestAndWorstStatesForTaxes.aspx

 

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