NCPA - National Center for Policy Analysis

State and Local Tax Burden Decreased in 2009

March 4, 2011

For nearly two decades the Tax Foundation has published an estimate of the combined state-local tax burden shouldered by the residents of each of the 50 states.  For each state, they calculate the total amount paid by the residents in taxes, and then divide those taxes by the state's total income to compute a "tax burden."  The goal is to focus not on the tax collectors but on the taxpayers.  That is, they seek to answer the question: What percentage of income are the residents of this state paying in state and local taxes?  Here are some key findings, says the Tax Foundation:

  • Taxpayers pay taxes not only to the state and local governments where they reside but also to out-of-state governments, both naturally and by design.
  • Nationwide, over a quarter of all state and local taxes are collected from nonresidents, and a true measure of the tax burden on the residents of any state must take this into account.
  • During fiscal year 2009, in the midst of a national recession, both income and taxes shrank, but taxes fell faster than incomes; the result was that tax burdens decreased from 9.9 percent in 2008 to 9.8 percent in 2009.
  • In 2009, the residents of New Jersey, New York and Connecticut paid the highest state-local tax burdens in the nation -- they're the only three states where taxpayers give up 12 percent or more of their income in state-local taxes.
  • Alaskans, consistently the least taxed in the nation, again paid the least in 2009, just 6.3 percent.
  • The next lowest state, over a full percentage point higher, is Nevada at 7.5 percent.

Source: Mark Robyn and Gerald Prante, "State-Local Tax Burdens Fall in 2009 as Tax Revenues Shrink Faster than Income: New Jersey's Citizens Pay the Most, Alaska's Least," Tax Foundation, February 2011.


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