A myriad of cultural, historical, and economic factors help explain the differences in state tax structures. At the root of a state’s tax system is what Tax Foundation experts characterize as a deal between residents and their governments.
“The level of services that citizens of a certain state want is a very personal decision to that state,” said Tax Foundation policy analyst Morgan Scarboro in an interview.
Scott Drenkard, director of state projects at the Tax Foundation, added, “There are some states that offer really high taxes and really great public services.”
Generally, states with lower-income residents tend to have lower tax burdens. Per capita income in all but three of the 15 states with the lowest tax burdens is lower than the average income nationwide. In contrast, the per-capita income in 12 of the 15 states with the highest tax burdens is greater than the national average of $49,246 a year. The three states with the highest tax burdens — Connecticut, New Jersey, and New York — have the highest, third highest, and fourth highest incomes per capita in the country.
To identify the states with the highest and lowest tax burdens, 24/7 Wall St. reviewed state and local tax burdens as a share of state residents’ income in fiscal 2012 provided by the Tax Foundation. Personal income per capita for each state is for 2016 and came from the U.S. Bureau of Economic Analysis. State individual income tax collections per capita are for fiscal 2015; state and local property tax collections per capita are for fiscal 2014; state general sales tax collections per capita are for fiscal 2015; and all came from the “Tax Foundation’s Facts & Figures 2017: How Does Your State Compare?” report. All data are for the most recent period available.