Tax burden falls for first time in decade

chart_worst_tax_burdens2.top.jpgTo see the tax rate in your state, click here. By Blake Ellis, staff reporter


NEW YORK (CNNMoney) -- State tax burdens for Americans fell for the first time in a decade during the recession.

U.S. residents paid an average 9.8% of their income in state and local taxes in 2009, according to a study the Tax Foundation released Wednesday.

That's down modestly from 9.9% in 2008 and reverses the upward trend seen over the past decade, as the recession crippled the economy and consumer spending. In fact, the latest tax burden results mark the first decline since 2000, the study shows.

"The 2009 fiscal year was a tough one for states and for taxpayers," said Mark Robyn, staff economist at the Tax Foundation and author of the study.

That said, state and local taxes remain down substantially from the national average of 10.4% in 1977, when the study was first published.

In the latest report, residents of New York, New Jersey and Connecticut felt the biggest blow to their wallets, all paying more than 12% of their income in state and local taxes. These three states have carried the highest tax burdens since 2005, with higher average incomes resulting in more spending.

Taxpayers living in Alaska, Nevada, South Dakota, Tennessee, Wyoming and Texas all paid less than 8% in taxes, with Alaskan residents paying the lowest rate of 6.3%.

The study tracks taxes spent by a state's residents, even if the taxes are paid to another state. Nationwide, more than a quarter of all state and local tax revenue is collected from non-residents. (Think hotel taxes, gas taxes when people come to visit, etc.)

So in the case of Alaska, most of its tax revenue comes from residents of other states.

"Alaska is able to shift almost 80% of its tax collections to residents of other states," said Robyn. "While taxpayers in 43 states are busy filing state income tax returns in April, Alaskans are instead receiving checks from a multi-billion-dollar reserve fund built up from years of taxes on oil extraction."

The majority of states saw taxes fall in 2009, the report showed. The District of Columbia, Maryland, and New Mexico led the declines, with all three states experiencing drops in tax burdens of about 1%. To top of page

State-Local Tax Burdens, All States
2009
State Rate Rank
(1 is highest)
Total State and Local Per Capita Taxes Paid Per Capita Income
United States 9.8% $4,160 $42,539
Alabama 8.5% 40 $2,967 $34,911
Alaska 6.3% 50 $2,973 $46,841
Arizona 8.7% 38 $3,140 $36,228
Arkansas 9.9% 14 $3,281 $33,238
California 10.6% 6 $4,910 $46,366
Colorado 8.6% 39 $4,011 $46,716
Connecticut 12.0% 3 $7,256 $60,310
Delaware 9.6% 23 $4,091 $42,688
Florida 9.2% 31 $3,897 $42,146
Georgia 9.1% 32 $3,350 $36,738
Hawaii 9.6% 22 $4,399 $45,725
Idaho 9.4% 28 $3,276 $34,973
Illinois 10.0% 13 $4,596 $46,079
Indiana 9.5% 25 $3,396 $35,767
Iowa 9.5% 24 $3,688 $38,688
Kansas 9.7% 19 $3,911 $40,302
Kentucky 9.3% 30 $3,059 $32,959
Louisiana 8.2% 42 $3,037 $37,109
Maine 10.1% 9 $3,832 $37,835
Maryland 10.0% 12 $5,218 $52,130
Massachusetts 10.0% 11 $5,316 $53,029
Michigan 9.7% 21 $3,565 $36,880
Minnesota 10.3% 7 $4,651 $45,220
Mississippi 8.7% 36 $2,678 $30,689
Missouri 9.0% 34 $3,425 $37,853
Montana 8.7% 35 $3,216 $36,784
Nebraska 9.8% 15 $3,960 $40,349
Nevada 7.5% 49 $3,311 $44,241
New Hampshire 8.0% 44 $3,765 $46,828
New Jersey 12.2% 1 $6,751 $55,303
New Mexico 8.4% 41 $2,997 $35,780
New York 12.1% 2 $6,157 $51,055
North Carolina 9.8% 16 $3,583 $36,650
North Dakota 9.5% 26 $3,892 $41,088
Ohio 9.7% 18 $3,652 $37,600
Oklahoma 8.7% 37 $3,259 $37,464
Oregon 9.8% 17 $3,761 $38,527
Pennsylvania 10.1% 10 $4,190 $41,672
Rhode Island 10.7% 5 $4,647 $43,372
South Carolina 8.1% 43 $2,742 $33,954
South Dakota 7.6% 48 $3,042 $40,082
Tennessee 7.6% 47 $2,752 $36,157
Texas 7.9% 45 $3,197 $40,498
Utah 9.7% 20 $3,349 $34,596
Vermont 10.2% 8 $4,181 $41,061
Virginia 9.1% 33 $4,392 $48,210
Washington 9.3% 29 $4,408 $47,361
West Virginia 9.4% 27 $3,034 $32,299
Wisconsin 11.0% 4 $4,427 $40,321
Wyoming 7.8% 46 $4,205 $53,931
District of Columbia 9.6%   $6,076 $63,492
Source: Tax Foundation calculations based on data from the Bureau of Economic Analysis, the Census Bureau, the Council on State Taxation, the Travel Industry Association, Department of Energy, and others.
 
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