States Where People Pay The Most (And Least) In Taxes

The Ten States with the Highest Tax Burdens

10. Pennsylvania
> Taxes paid by residents as pct. of income: 10.1%
> Total state and local taxes collected: $109.7 billion
> Pct. of total taxes paid by residents: 76.3%
> Pct. of total taxes paid by non-residents: 23.7%

Pennsylvania has among the largest revenues in the country. The great majority of this money comes from its residents. Approximately one third of state tax revenue comes from individual income taxes. Another one half comes from various sales taxes. Pennsylvania also has the highest state corporate tax rate in the country. There are a number of ways the state could increase the amount of taxes it “exports” to non-residents, however. The state can further expand its burgeoning gambling industry. According to the Pennsylvania Gaming Control Board, $81.4 million in tax revenue was generated by table games in the most recent fiscal year. The state could also pass a tax on natural-gas drilling, as it is currently the only state without one.

9. Maine
> Taxes paid by residents as pct. of income: 10.1%
> Total state and local taxes collected: $10.7 billion
> Pct. of total taxes paid by residents: 64.7%
> Pct. of total taxes paid by non-residents: 35.3%

For a state with one of the highest tax burdens on its residents, Maine has a relatively large percent of its total tax revenue come from out-of-state residents and business, standing at more than 35%. Maine has the eighth lowest population and the tenth lowest tax revenue. The state has middle-of-the-road taxes for gasoline and alcohol, but at $2.00 per pack, it is tied with Michigan and Alaska for the 11th highest tobacco tax.

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8. Vermont
> Taxes paid by residents as pct. of income: 10.2%
> Total state and local taxes collected: $6.1 billion
> Pct. of total taxes paid by residents: 62.1%
> Pct. of total taxes paid by non-residents: 37.9%

Vermont collects a relatively large percentage of its tax revenue from non-residents. The state has one of the largest shares of vacation homes in the country, and collects a major portion of its property tax revenue from these homes, effectively taxing residents of other states. Despite this, residents of Vermont have among the greatest tax burden in the country. A large reason for this is the state’s excise taxes, or taxes on the sale of goods and services. According to a recent report from the Mercatus Center titled, “Excise Taxes in the States,” Vermont collected the greatest amount in excise taxes per capita in 2010, $858. This includes taxes on things such as tobacco, alcohol, insurance, and motor fuels.

7. Minnesota
> Taxes paid by residents as pct. of income: 10.3%
> Total state and local taxes collected: $45.7 billion
> Pct. of total taxes paid by residents: 75.5%
> Pct. of total taxes paid by non-residents: 24.5%

Less than 25% of Minnesota’s tax revenue comes from non-residents and businesses. The state only collects average, or below average, rates on alcohol and tobacco, and has one of the smallest tourism economies in the country. This means the state relies heavily on income and property taxes from residents. Minnesota has the 21st largest population in the country, but it collects the 12th most in tax revenue each year. The state and local taxes collected per capita is the seventh highest in the country, as is the tax burden as a percent of income.

6. California
> Taxes paid by residents as pct. of income: 10.6%
> Total state and local taxes collected: $354 billion
> Pct. of total taxes paid by residents: 82.5%
> Pct. of total taxes paid by non-residents: 17.5%

California is exceptional in many ways when it comes to taxing its residents. The state has the highest statewide sales tax in the country, currently 8.25%. It also has the highest tax on gas, charging 46.6 cents per gallon. The state collects among the lowest amount of taxes from non-residents and business out of all the states. But with the lowest credit rating in the nation, according to S&P, an ongoing budget problem, and a $10.8 billion deficit, one of the biggest in the country, the state may want to change its approach.