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Tax-Friendly Places 2007

See how much you'll play in income, sales and property taxes around the country.

*Taxes dividend and interest income
Source: CCH Inc.
Taxing your income
As the U.S. economy continues to remain resilient, state and local governments have had no difficulty making sure their coffers remain filled. And one of the biggest drivers of revenue has been taxes on individual income.

"Due to the booming economy, people are paying more taxes," said Curtis Dubay, an economist and the author of the Tax Foundation study.

Currently all but 9 states collect income tax, according to the tax information publisher CCH Inc. In 2006, some states, like Arizona, New Mexico and Ohio, even reduced income tax rates for some or all income brackets.

Last year, those states whose tax system mimics the federal system, like Vermont and Rhode Island, experienced some of the biggest gains in revenue, said Dubay.
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