On April 2, 2014 the Tax Foundation released its Annual State-Local Tax Burden Ranking FY 2011. The Tax Foundation measures the tax burden by including all state and local taxes paid by each state’s residents. This includes taxes residents pay to other states and to local governments outside their resident state. The Tax Foundation used the most recent data which is from 2011.
When looking at all rankings like this one, please remember that some data is estimated. There is no perfect way to gather all the taxes paid. The other thing to keep in mind is that some people can take the data, rearrange it and make the results seem to support their political agenda. I am not saying the Tax Foundation did this.
The top 5 states are:
- New York – 12.6%
- New Jersey – 12.3%
- Connecticut – 11.9%
- California – 11.4%
- Wisconsin – 11.0%
The bottom 5 states are (lowest to highest):
- Wyoming – 6.9%
- Alaska – 7.0%
- South Dakota – 7.1%
- Texas – 7.5%
- Louisiana – 7.6%
NC ranks 17th with a burden of 9.8%. The U.S. average is 9.8%. Does this make NC average? But there are 50 states and we are 17th so doesn’t that mean NC is a high tax state?
Lets take this list and have some fun with it. Where does NC fall based on resident state taxes paid per capita? NC ranks 31st using this measure, making NC look like a low tax state. What about total state and local taxes per capita including taxes paid by NC residents to other states? Here NC is 24th, making NC look about average.
Why the differences? Mainly it is because NC ranks 41st in per capita income. While our taxes per capita are lower, they still make up a larger percentage of our below average per capita income than most states and right at average for the country.
So does NC have a high state and local tax burden, a low one, or are we in the middle? It all depends on how you do the rankings.