U.S. Taxes 2016: Texas Has Lowest Burden on Citizens
With tax day coming closer, citizens have begun griping about why taxes are incredulously high in their states. The gut feeling of those who live in New York, New Jersey or Connecticut are spot on. Residents of the Golden State, on the other hand, are better off than New Yorkers, and Texans have everyone feeling jealous.
Tax rates have been tricky to compare across state lines because of a number of variables. However, when it came down to income taxes, nine states in the U.S. charge citizens a flat percentage regardless of their salary. On the other hand, most states still took a graduated approach with multiple income brackets. Missouri and California are at the top of the list with 10. And the seven states of Alaska, Nevada, South Dakota, Florida, Wyoming and Texas, charge no state income tax at all.
To achieve the most precise comparison of taxes by state, economists calculated the implemented tax rate for single taxpayers who earn a taxable $50,000 in every state. They opted to use $50,000 for the comparison because the median household income for 2014, the latest year for which Census data is available, was $53,657, according to Forbes.
Economists emphasized that it was reasonable that after taking each state's standard deduction, from $0 in Indiana to $10,250 in Wisconsin, a single household had the average income of around a taxable $50,000. In many states, this taxable $50,000 sits on multiple tax brackets, with every specific bracket assessed at higher rates. To reach the effective rate at this income level, economists estimated the numbers using 2016 tax statistics from the Tax Foundation in Washington, D.C., which tracks tax policies.
Taxes come in many form than income, with sales and property taxes as the biggest considerations. The Tax Foundation tallied total tax revenue submitted by each state from both businesses and individuals. On the list of the best and worst state taxes, New York came in dead last. On the other hand, the lowest tax burden was in Alaska, according to Commerce.