To determine which states tax their residents most aggressively, WalletHub compared 50 states based on the three components of a state’s tax burden.
With Tax Day looming on April 18 and 73 percent of Americans not feeling the government is spending their tax dollars wisely, personal finance site WalletHub released its report today. 2023 State Tax Burden Reportand expert commentary, along with its 2023 Tax Facts Infographic.
To determine which states tax their residents most aggressively, WalletHub compared 50 states based on three components of a state’s tax burden — property taxes, personal income taxes, and sales and excise taxes — as part of a person’s total income.
New York’s tax burden (1=highest, 25=average):
-
1Yingshi – Overall tax burden (12.47%) -
5day – Property tax burden (4.36%) -
1Yingshi – Personal income tax burden (4.72%) -
twenty fourday – Total sales and excise tax burden (3.39%)
For the full report, please visit:
https://wallethub.com/edu/states-with-highest-lowest-tax-burden/20494
expert comment
What is the relationship between state tax burdens and economic growth?
“I suspect that higher tax burdens cause firms to relocate to lower tax states/jurisdictions and dampen growth, but there may be empirical evidence to the contrary – for example, there is a lot of growth in high tax areas like California and New York City. But this is An economic or empirical matter, not a legal one, I think causation may be difficult to establish.”
Gregory Germain – Professor, Syracuse University School of Law
“Many disagree on the relationship between a country’s tax burden and economic growth. There are good reasons why, other things being equal, a higher tax burden lowers economic growth. On the other hand, there are also strong arguments for , certain types of public investment—such as education, transportation, and infrastructure—promote economic growth, and taxes enable states to make these investments. Ultimately, the answer may depend not only on how much a state taxes, but on those taxes structure and where the state spends its money.”
Jordan Barry – Professor, University of Southern California
How will inflation affect local government tax revenues?
“Initially, you’ll see that inflation raises the price of taxable goods and say it’s a win-win for local tax revenue. But as I’ve seen, a lot of people spend less on high tax items and just buy them Things that are needed, not a lot of high priced luxuries. So with this concept, the local sales tax is lower. Overall, I think inflation is a small negative on local tax revenue, but a real negative .”
Joseph Krupka, CPA/PFS CGMA – Assistant Teaching Professor; Program Coordinator, Accounting and Financial Planning Program, FSUPC, Florida State University, Panama City
“As a government auditor in the past, I know that states often require counties and cities to maintain a balanced budget (expected revenue should equal expected spending). It is well known that inflation has a direct effect on prices. So if we don’t change spending, we can expect to see an increase in inflation. Expenditures increase during periods of expansion. Therefore, the government will face the choice of reducing expenditures or increasing revenues. Usually, increasing revenues can be achieved by expanding the tax base, changing tax rates, or creating new taxes. In any case, taxpayers will receive more taxes. Therefore, Inflation could lead to lower government spending or higher tax burdens, neither of which is ideal for citizens.”
Patrick L. Hopkins, Ph.D., CPA – Assistant Professor at Texas Christian University
Should states and localities tax property at different marginal rates like income?
“Property taxes are basically regressive wealth taxes levied at the local city or town level. Typically, they are used to fund the town or city’s operating budget and meet its obligations. Many states pay property taxes to local jurisdictions Provide credits to offset state income taxes or the federally subsidized Veterans and Seniors Credit to offset property taxes. As a regressive tax, property taxes should not be tied to a progressive tax system.”
James N. Mohs DBA – Associate Professor, University of New Haven
“The answer depends on one’s view of fairness. If one argues that wealthier people should pay higher rates for more valuable possessions, rather than paying higher marginal rates, that seems more “fair.” Belief in a flat tax ratio People who have a fairer progressive tax rate will find a flat tax fairer. In my view, this is a political issue based on the idea of individual fairness.”
Gregory Germain – Professor, Syracuse University School of Law
