States With the Highest (and Lowest) Taxes

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States With The Highest Taxes

10. Pennsylvania
> Taxes paid by residents as pct. of income: 10.3%
> Total state taxes collected: $32.9 billion (6th highest)
> Tax burden per capita: $4,374 (12th largest)
> Income per capita: $42,268 (20th highest)

Pennsylvania, which has a long-term plan to raise taxes to repair its crumbling transportation infrastructure, levies a tax of 41.8 cents per gallon of gasoline, the fifth highest rate in the nation. The state’s Department of Transportation is planning to repair some 4,700 deficient bridges. The project, which is expected to cost roughly $4 billion, is partly funded by the state’s gas tax. In addition, residents paid an effective property tax rate that was among the highest in the country in 2012. That year, in an effort to lower property taxes, the state’s House of Representatives considered passing a bill that would eliminate property taxes in favor of higher sales and income taxes. Proposals to overhaul the state’s property tax system are still being debated.

9. Vermont
> Taxes paid by residents as pct. of income: 10.5%
> Total state taxes collected: $2.8 billion (5th lowest)
> Tax burden per capita: $4,351 (14th largest)
> Income per capita: $41,634 (21st highest)

Vermont collected, on average, nearly $2,200 in property taxes per resident in 2011, more than all but four other states. This was partly due to the state’s effective property tax rate — one of the highest in the nation — as well as the relatively high property values in Vermont. The median home value in the state was $216,900 in 2012, considerably higher than the national median of $171,900. Home values increased by 5.6% from 2007 to 2012, compared with a nationwide decline of more than 11% over that period. One other factor likely contributing to the high tax burden facing residents was the state’s income tax. Residents earning over $405,100 per year were taxed at a rate of 8.95%, one of the highest top income tax rates in the U.S.

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8. Rhode Island
> Taxes paid by residents as pct. of income: 10.5%
> Total state taxes collected: $2.8 billion (6th lowest)
> Tax burden per capita: $4,676 (8th largest)
> Income per capita: $44,367 (16th highest)

Rhode Island was one of the higher ranked states for both per capita income and home value. Per capita income in Rhode Island was over $44,000, above the U.S. average of $42,473. Residents also paid an effective property tax rate of 1.49% on average in 2012, which was one of the highest in the U.S. In addition, Rhode Island residents also pay a great deal in taxes to other states. More than 3% of their income goes in taxes to other states, such as neighboring Massachusetts and Connecticut, more than all but a handful of states. Additionally, the state’s budget deficit is projected to nearly triple to $410 million by 2018. To address its debt and budget problems, the state may have to either cut services or further raise taxes.

7. Maryland
> Taxes paid by residents as pct. of income: 10.6%
> Total state taxes collected: $17.0 billion (15th highest)
> Tax burden per capita: $5,598 (4th largest)
> Income per capita: $52,805 (4th highest)

Maryland residents were among the nation’s wealthiest in 2011 — average income in the state was $52,805 that year, the fourth highest in the U.S. While individuals at the highest income bracket in the state were taxed 5.75% — lower than half of all other states — state and local income tax collections were third highest nationally, at $1,832 per capita in 2011. The state had a below-average effective property tax rate, but high home values drove up payments. In 2011, the property tax burden in Maryland was $1,449 per person, among the nation’s highest.

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6. Minnesota
> Taxes paid by residents as pct. of income: 10.7%
> Total state taxes collected: $20.6 billion (12th highest)
> Tax burden per capita: $4,858 (7th largest)
> Income per capita: $45,552 (14th highest)

Minnesota had the seventh-highest sales tax rate of any state in the country. As a way to lure tourists to the Mall of America, one of the largest shopping malls in the U.S., the state does not tax clothing or shoe purchases. In addition to a high sales tax, state residents pay a 28.5 cent excise tax per gallon of gasoline, the seventh-highest rate in the country. Relief from the high gas tax is not likely to come anytime soon, as the state’s Department of Transportation has been pushing for a higher fuel tax in order to increase funding for highway and bridge projects. As of 2011, Minnesota residents already paid 8.1% of their income in taxes within their home state, one of the highest figures in the nation.