> Taxes paid by residents as pct. of income: 7.6%
> Total state taxes collected: $9.0 billion (25th lowest)
> Tax burden per capita: $2,872 (4th smallest)
> Income per capita: $37,889 (20th lowest)
The average local sales tax rate in Louisiana is currently 4.89%, the highest in the country. However, localities offset this by levying low property taxes. The state’s effective property tax rate of just 0.43% was the third lowest in the country in 2012. State residents also enjoy the third-lowest tax on cigarettes and the eighth-lowest tax on spirits. Louisiana has a large natural resources mining sector. The sector contributed 9.8% to the state’s GDP in 2012, making it Louisiana’s biggest industry. Projects, such as the $6 billion Cheniere Sabine Pass Liquefaction terminal expansion in Cameron Parish, are expected to create thousands of jobs and strengthen the state’s economy. A vibrant energy sector likely helped many residents save on their tax bills by charging companies a severance tax for extracting oil and gas.
> Taxes paid by residents as pct. of income: 7.5%
> Total state taxes collected: $48.6 billion (3rd highest)
> Tax burden per capita: 3,088 (8th smallest)
> Income per capita: $41,269 (23rd highest)
Texas is one of a handful of states levying no income tax. While the state collects a gross receipts tax — which is a tax on business transactions — it does not collect any corporate income tax. Texas taxes gasoline at just 20 cents a gallon, among the lowest gas tax rates. The state’s total sales tax rate of 8.15%, on the other hand, is above the average among the states. Also, unlike many other states with low overall tax burdens, the 2012 property tax rate of 1.72% in Texas was relatively high. Overall, state and local taxes made up only 7.5% of state residents’ income in fiscal 2011, compared with the average rate among all states of nearly 10%.
3. South Dakota
> Taxes paid by residents as pct. of income: 7.1%
> Total state taxes collected: $1.5 billion (the lowest)
> Tax burden per capita: $3,052 (7th smallest)
> Income per capita: $43,212 (18th highest)
South Dakota collected just $1.5 billion in taxes in fiscal 2012, the least in the nation. The state avoids levying several major taxes. The state has no individual or corporate income tax, and its sales and property tax collections were relatively low. As a result, residents paid less in taxes to their home state or its localities, both in dollars and as a percentage of their incomes, than Americans in all but one other state. However, South Dakota residents paid more than 3% of their incomes on taxes in other states. Because of the state’s lax tax code, it is common for wealthy out-of-state families to set up trust companies in South Dakota. According to Bloomberg, state legislators have relaxed regulations so these families do not even need to move to the state or invest there.
> Taxes paid by residents as pct. of income: 7.0%
> Total state taxes collected: $7.0 billion (18th lowest)
> Tax burden per capita: $3,319 (18th smallest)
> Income per capita: $47,354 (8th highest)
The state of Alaska actually collected more than $10,000 per person in taxes in 2012, the most in the nation. However, due to a combination of high incomes, low taxes on residents and high charges to corporations, Alaska had the second-lowest tax burden in the nation. As of 2012, Alaska collected 9.4% of its taxes from corporate income taxes, one of the highest percentages in the country. As a major energy producer, Alaska has also benefited from the severance tax it imposes on petroleum production, a tax that has helped to bolster its coffers. Residents, on the other hand, did not have to pay a state income tax. Overall, the per capita tax burden on individuals was just $3,319 per person in 2011, or just 7% of the residents’ total income.
> Taxes paid by residents as pct. of income: 6.9%
> Total state taxes collected: $2.6 billion (4th lowest)
> Tax burden per capita: $3,500 (22nd smallest)
> Income per capita: $50,805 (6th highest)
Wyoming overtook Alaska as the state with the lowest tax burden in 2011, following a drop in the average tax rate from 7.8% to 7.1% of per capita income. Wyoming collected just $2.6 billion in taxes in fiscal 2012, among the lowest nationwide. Despite the state’s low revenue — from taxes and other sources — the state had just $1.3 billion in short- and long-term debt, the lowest in the U.S. in 2012. Like several other states with low tax burdens, Wyoming has no individual income tax. Excise taxes are also some of the nation’s lowest. While spirits, for example, cost an additional $13.50 per gallon in the U.S., on average, Wyoming is one of only a few states without any taxes on spirits. Wyoming introduced the nation’s first wind energy tax in 2010, at $1 per-megawatt-hour, although the state has yet to collect large revenues from this tax.