public policy

Tax Foundation ranks R.I. tax burden fifth highest in 2009

RHODE ISLAND’s state and local tax burden was the fifth highest in the nation in 2009, according to a report released by the Tax Foundation on Wednesday. For a larger version of this image, CLICK HERE.
Posted 2/24/11

PROVIDENCE – Rhode Island’s state and local tax burden was the fifth highest in the nation in 2009, according to a report released by the Tax Foundation on Wednesday.

The Tax Foundation calculated, for each state, the total amount paid by the residents in taxes and then divided those taxes by the state’s total income to compute the figure. Rhode Island’s state-local tax burden was 10.7 percent, followed closely behind Wisconsin, at 11.0 percent. Residents of New Jersey, New York and Connecticut gave up more of their income in state and local taxes than the rest of the nation, with tax burdens of 12.2 percent, 12.1 percent and 12.0, respectively.

The U.S. average combined state and local tax burdens fell slightly in fiscal year 2009, slipping to 9.8 percent from 9.9 percent – but down “significantly” from 1977’s average of 10.4 percent, the first year the foundation took estimates. The entity said taxes shrank faster than income in 2009 largely due to a slower economy.

Alaska had the lowest tax burden at 6.3 percent, nearly half of what New Jersey residents pay.

“Alaska is able to shift almost 80 percent of its tax collections to residents of other states,” said Mark Robyn, Tax Foundation economist and the study’s author.

“While taxpayers in 43 states are busy filing state income tax returns in April, Alaskans are instead receiving checks from a multibillion-dollar reserve fund built up from years of taxes on oil extraction,” Robyn continued.

The Tax Foundation said its study includes both the in-state taxes residents are subject to as well as the taxes they pay to other states, for example by virtue of working in, traveling to or buying products in other states. Therefore, the study is reflective of the individual taxpayer while other measures focus on state-by-state revenue and reflect the perspective of a state’s tax collectors.

In Oregon, residents paid 27 percent of their total taxes to out-of-state jurisdictions in 2009, it said.

For Rhode Island, total taxes paid per capita were calculated at $4,647; $3,290 to the home state and $1,358 to other states. Income per capita was calculated at $43,372, ranking 17th highest.

Previously, the Ocean State’s tax burden ranked 7th in both 2008 and 2007. In 1977, it stood at 11.3 percent and ranked 8th in the nation.

Massachusetts’ tax burden, at 10.0 percent, ranked 11th in 2009.

To access the Tax Foundation Special Report No. 189, “State-Local Tax Burdens Fall in 2009 as Tax Revenues Shrink Faster than Income,” click here.

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