Free State Project Forum

Archive => Which State? => Topic started by: George Reich on April 10, 2003, 03:08:46 pm

Title: How Tax Friendly is Your State?
Post by: George Reich on April 10, 2003, 03:08:46 pm
Top five friendliest:  :)

1) AK
2) NH
3) DE
4) TN
5) TX

Top five unfriendliest:  :'(

1) ME
2) NY
3) MN
4) RI
5) CT

Link:

http://money.cnn.com/pf/features/lists/statelocaltaxes/index.html

Title: Re:How Tax Friendly is Your State?
Post by: vermass on April 10, 2003, 06:27:35 pm
   On the MA state income tax return there is a spot to pay taxes on stuff you bought in ANOTHER state. I kid you not. We are supposed to claim anything we bought in another state and than brought here within six months!
   There was a question on this years ballot to get rid of state income tax, it failed. Gee, let me see how that is possible. State employees do NOT HAVE TO PAY state income tax. Do you think maybe they voted to keep the state income tax? (check here for yes_ and here for yes_) The people who comute from NH who do have to pay MA state income taxed are taxed without representation since they do not vote in MA. I wonder how THEY would have voted.
    For me the FSP will be a success when my rear bumber passes the MA state line for the last time!!!
Title: Re:How Tax Friendly is Your State?
Post by: George Reich on April 10, 2003, 08:25:09 pm
Why do you just parrot CNN's summary table? Why do you not include all ten states like other researchers do here? Why do you not include the actual percentages which that table is based upon?

I don't know - maybe I was a parrot in a past life? I do not think the year-to-year change is all that interesting, but perhaps others will. I figured someone reading this post would probably want to see where his own state ranked on the list. The information is as close as clicking on the link I included. Also, posting a link rather than a data table helps the forum to load faster. I have a cable modem but realize that others may not.

Title: Re:How Tax Friendly is Your State?
Post by: Zxcv on April 10, 2003, 10:41:10 pm
Oh-oh, hasn't anyone noticed the problem here?

The numbers make huge changes from year to year. How valid is it to take a one-year snapshot when the ratings can bounce around so much?

I was going to update the big spreadsheet with these 2003 data, but now I don't know what to do. The tax foundation has rankings back to 1971. Should I do one row averaging all those rates back to '71, and another just with the latest year's rates?

Title: Re:How Tax Friendly is Your State?
Post by: Kelton Baker on April 11, 2003, 01:25:46 am
I'll go ahead and be a wise-acre here and respond to the title of this thread, "How Tax Friendly is Your State?"  uh, the state that I am currently in, California, uh, it is a VERY, Very tax-friendly state, oh yes! --is there a tax that California has not treated in the most friendly manner?
____________________________________________ ;)


Just FYI,
The Tax Foundation, where the information from the CNN Money article comes from also has a table comparing the total tax burden in each state to just the state/local tax burden:

Here's the newly released table for this year,
http://www.taxfoundation.org/statelocal03.html (http://www.taxfoundation.org/statelocal03.html)

and last year's,
http://www.taxfoundation.org/statelocal02.html (http://www.taxfoundation.org/statelocal02.html)


Interesting to note that states like Idaho, North Dakota, and Maine that have a three-legged tax structure, (or in a different parlance,  'utilize a balanced variety of revenue sources' using all of income,sales,property taxes) are also those states which proved to have their ranks move negatively or rank with a less comparative burden after factoring-in the federal side of the equation.  Of course, we are only talking about a relatively small difference from worst state to best state in comparison to the much larger issue of federal taxation.


There is something I don't like about this whole measurement,
and that is,
This using of tax burden to average income is still a very incomplete look at the picture of what takes place at the taxpayer level; first of all, you have all revenue sources which come from among 25 different possible use taxes according to the Census bureau at the U.S. Census tax statistics site (http://www.census.gov/govs/qtax/qtx024t3.pdf (http://www.census.gov/govs/qtax/qtx024t3.pdf))
then you are comparing this to all of average wages, even despite the fact that, as we all know, the higher- income earners pay most of the taxes anyways,  (http://www.rushlimbaugh.com/home/menu/top_50__of_wage_earners_pay_96_09__of_income_taxes.guest.html) right? (well according to Rush Limbaugh anyways, economists know that everyone pays taxes one way or another), and despite the fact that the cost of living (which is also affected by taxes) greatly affects the real wage.

Perhaps the statist Center on Budget And Policy Priorities can explain my contentions better here: Tax Foundation Figures Produce Misleading and Inaccurate Impressions of Middle Class Tax Burdens (http://www.cbpp.org/4-9-03tax.htm)  This organization has a variety of reasons why this ranking of taxes as a percent of GDP should only be used to give "a sense of the share of the economy devoted to the public sector"

The ideal measurement I can think of would be to gather enough data to get a good measurement of actual spending in each state, averaged over a few years and dividing that by the number of actual number of taxpayers who filed federal forms.  Even just an accurate spending budget would be nice, anybody know?

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Title: Re:How Tax Friendly is Your State?
Post by: Kelton Baker on April 11, 2003, 10:10:25 am
The Census bureau has lots of info on different taxes collected, such as recent quarterly revenue as provided by the link in the previous post.  It would be really interesting to compare all of those different 'revenue streams' .

The National Conference of State Legislatures has done a few comparisons of these different taxes, though much of it is out-dated.
Here's one (updated 1999),

Estate, Inheritance and Gift Tax Revenue by State (http://www.ncsl.org/programs/fiscal/deathtax.htm)($ per Capita)
AK $2.74
ID   3.35
ND   7.50
WY   7.75
ME  11.89
MT  16.57
SD  29.12
VT  30.59
NH  34.58
DE  43.38

This is a reflection of the combined amount of value in these transfers, the different types of taxation methods, and the tax rate, which info, hasn't been so easy to come by, for all states so far anyways.

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Title: Re:How Tax Friendly is Your State?
Post by: Zxcv on April 11, 2003, 11:16:38 am
Kelton (aka exitus aka exitos, etc) I wish you wouldn't keep changing your handle. What's the point? Life's already confusing enough for me.  :P

You are right, this is a very questionable measure. Oregon is way down in the measure but is the 7th highest in per-capita spending. That's saying something...

BTW, if you read the Tax Freedom Day report, it explains the disparity in state/local tax burden vs fed/state/local burden this way:
Fed taxes overwhelm state and local, so they dominate when they are added in. And, they are very "progressive" (what a crock calling them that), so states with high per-capita incomes get dinged more. Or something like that...   ::)

BTW, I find that paper you mention pretty flawed. It is largely one gigantic "straw man" attack on the Tax Foundation. The Foundation does not (as far as I know)represent its report as being the tax burden on middle income taxpayers; it is the average tax burden, which clearly must include high income taxpayers. It may be more on target about the taxed income not counted, and the like, but what they call "authoratative sources" are government ones, which I am not particularly excited about trusting on this subject either!

I will look at the interitance stuff you dug up, thanks. More to put in the big spreadsheet. It is getting pretty unwieldy...

I went ahead last night and charted the entire 32-year run of this tax data from our 10 states (ugh, what a lot of work). Some interesting points emerge:

AK, currently the lowest taxed in the nation, was the highest taxed back in 1976-77!

WY, currently fairly low in our 10, back in 82-84 was number 1 in the country! That's when their economy crashed, which makes you wonder how much effect the climbing tax rate had on causing the crash.

NH, except for a bump in '92 when it reached 22nd in the nation, commendably stays very low, sometimes lowest in the nation (never let it be said I never had a kind word for NH  ;) )

ME battled for years with NY for first place in the nation in highest taxes, finally "winning" in '97, where it still remains.

SD was 2nd highest in our group back in '71, but for many years has been keeping taxes down in the lower ranges, third lowest in our group since '97.

Here's how our 32-year average state & local taxes stack up:
AK 7.9
NH 8.0
ND 9.0
SD 9.3
DE, ID 9.5
MT 9.8
WY 10.4
ME, VT 11.3
Title: Re:How Tax Friendly is Your State?
Post by: Kelton Baker on April 11, 2003, 12:40:09 pm
O.K. Zxcv, no more handle changes, I'll save that for the antique dresser that I am refinishing.  :)

Here's something that looks more interesting than taxes, see State Expenditure Report by the National Association of State Budget Officers
TOTAL STATE EXPENDITURES BY FUND SOURCE (http://www.nasbo.org/Publications/PDFs/nasbo2001exrep.pdf)
 http://www.nasbo.org/Publications/PDFs/nasbo2001exrep.pdf  (http://www.nasbo.org/Publications/PDFs/nasbo2001exrep.pdf)

(large .pdf file!)

Finding the per-capita expenditures using the yearly population figures for each set of data would make this meaningful, but at first glance-estimate, it looks like Vermont and Maine are the biggest big spenders.
Thread views when this was posted: 69
Title: Re:How Tax Friendly is Your State?
Post by: Zxcv on April 12, 2003, 12:29:19 pm
I will take a look at that when I get the chance  :P

Actually, I have a spending per-capita row in the big spreadsheet ("Gov2percapita"). Jason told me that was not a great measure, I can't remember why but I think because it penalized states like WY and AK that have mineral extraction resources. I'm not sure I agree with the notion that state government should be spending more money because they have stuff under the ground.  ::)  After all, it's not their stuff, it belongs to those who own the land. So to me, a per-capita spending number would ge a good measure.

But maybe I'm remembering this wrong. Jason should comment if he's cruising through here...

In that row, AK is the big spender, twice as high as the first runner-up, Wyoming. ME and VT are not particularly high. I wonder why the disconnect beween this and your impression?

The official spending row is spending as a percentage of Gross State Product.
Title: Re:How Tax Friendly is Your State?
Post by: freedomroad on April 13, 2003, 07:39:03 pm
I will take a look at that when I get the chance  :P

Actually, I have a spending per-capita row in the big spreadsheet ("Gov2percapita"). Jason told me that was not a great measure, I can't remember why but I think because it penalized states like WY and AK that have mineral extraction resources. I'm not sure I agree with the notion that state government should be spending more money because they have stuff under the ground.  ::)  After all, it's not their stuff, it belongs to those who own the land. So to me, a per-capita spending number would ge a good measure.


I do not know about AK, but Wyoming has a lot of investments and lots of the money that it spends comes from its investment profits.  Wyoming is doing so well with investments, many people were talking about selling much of the state land and investing that money.  However, with the stock market taking a 3-4 year dive, all of that talk is gone.
Title: Re:How Tax Friendly is Your State?
Post by: JasonPSorens on April 14, 2003, 08:18:45 am
I think what you're recalling is that I said I prefer spending as % of GSP to spending per caput. ;)
Title: Re:How Tax Friendly is Your State?
Post by: craft_6 on April 14, 2003, 11:01:46 am
The National Taxpayers Union Congressional ratings for 2002 are now available at:
 http://www.ntu.org/features/congress_by_numbers/ntu_rates_congress/2002/VS_2002.pdf

Ratings ranged from 8% for Connecticut's Dodd to 88% for Texas' Paul, with the average at 41%.

Here are the average ratings for the 10 FSP states, with individual ratings following (Senate ratings listed first):

Wyoming, 69% (73, 73, 61)
New Hampshire 62% (69, 59, 61, 60)
Idaho, 58% (60, 54, 60, 56)
Alaska, 55% (58, 53, 53)

Montana, 47% (53, 32, 56)
Delaware, 33% (26, 15, 58)
Maine, 29% (41, 40, 18, 16)
South Dakota, 29% (18, 14, 55)

Vermont, 18% (18, 14, 22)
North Dakota, 16% (15, 14, 18)

As an indication of how pro-liberty the native culture is (they elected these people, after all), this seems to match up pretty well with numerous other indicators which have been considered in other threads.





Title: Re:How Tax Friendly is Your State?
Post by: Zxcv on April 15, 2003, 12:37:51 am
Yeah, these are going to be pretty much like the RLC rankings although this is focussed on taxes. I went to the NTU site and averaged all the data they have for several years, and got this (percentage of the time NTU agreed with their votes):

WY 75.2
NH 71.8
ID 70.5
AK 66.9
MT 50.9
DE 45.8
ME 40.7
SD 29.0
VT 27.8
ND 16.2

This is collected in a little spreadsheet I have called NTU.xls

I will add this row to my big spreadsheet.
Title: Re:How Tax Friendly is Your State?
Post by: Zxcv on April 17, 2003, 10:13:43 am
I just looked at that link you provided, exitus. It's a good one to see what they are spending money on.

I found Wyoming spent 26.4% of its total budget on transportation! This is #1 in the country, far above second place ND at 20.1% (the national average is 8.9%). I guess when a state has a teeny weeny budget, it is going to spend it on roads.

And schools.  :(  WY is #1 there too, spending 36.3% of its budget on primary/secondary "education". Just think what Separation of School & State would do to tax rates in that state!

There is an interesting category of spending, "Other". The national average of the percentage of budget dedicated to "other" is 32.1%. Wyoming is the only state with 0.0% in this category. Kind of a no-frills government, looks like.   ;)

How about this, Massachusetts has a budget 9 times larger than NH!  :o

My state, Oregon, had been adding the equivalent of Wyoming's entire budget to its expenditures every year! Much of it was driven by "conservative" Republican spending priorities.  >:(

You know, what I'd really like to see is an inflation-adjusted comparison of total state expenditures, over the long term (say 20 years). That would tell us something about the tendency to increase spending in a state. It would make a nice chart to look at. Do you have any idea where that kind of info can be found? If you do, I will put it in a chart.
Title: Re:How Tax Friendly is Your State?
Post by: Kelton Baker on April 17, 2003, 10:54:21 am
I just looked at that link you provided, exitus. It's a good one to

And schools.  :(  WY is #1 there too, spending 36.3% of its budget on primary/secondary "education". Just think what Separation of School & State would do to tax rates in that state!

Speaking of school and state, look at this comparison:

SCHOOL FUNDING 101: How Idaho compares, from the IdahoStatesman.com website (http://www.idahostatesman.com/Common/PrintMe.asp?ID=30309)
(http://www.idahostatesman.com/news/education/images/edseries/ed-bigchart.gif)


Money going out Spending per Student (as a percentage of US Average):

ND = 126.9
WY = 122.3
VT = 121.8
DE = 120.8
ME = 110.2
SD = 101.1
AK = 100.7
MT =  99.3
NH =  98.4
ID =  82.7



Money Coming In through taxation (Effort per $1000 GSP) :

VT = $52.36
ME =  48.76
MT =  47.07
AK =  45.19
WY =  41.27
ID =  39.83
ND =  38.44
SD =  34.86
NH =  34.19
DE =  28.36



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Title: Re:How Tax Friendly is Your State?
Post by: Kelton Baker on April 17, 2003, 12:12:42 pm
. . .


How about this, Massachusetts has a budget 9 times larger than NH!  :o

. . .

Just considering that MA has a population roughly 5 times the size of NH, yet spends 9 times that of NH says that the government and voters in MA are very different from NH.
---
How about if we compare state budgets per state populations, budgets per number of taxpayers, and budgets per number of eligible voters? (I think its all a good idea, I propose it with the hope that someone else will volunteer the work:)
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Title: Re:How Tax Friendly is Your State?
Post by: freedomroad on April 17, 2003, 01:52:21 pm
How about if we compare state budgets per state populations, budgets per number of taxpayers, and budgets per number of eligible voters? (I think its all a good idea, I propose it with the hope that someone else will volunteer the work:)

Why do any of that?  State budgets are not directly related to taxes.  This is a tax thread.  For example, Alaska, with the lowest taxes in the country, has a large budget and large taxes.  Wyoming, with some of the lowest taxes in the country gets a great deal of its spending money from its investments and its mineral laws.  This is a tax thread, people should not spend several hours trying to come up with unrelated details.
Title: Re:How Tax Friendly is Your State?
Post by: Hank on August 27, 2003, 05:53:07 pm
I'd much rather live in a state that its state and local governments on sales taxes, usage taxes, royalties, tolls, and user fees.

I do not want to live in a state whose governments intrude into my privacy and private property with income taxes or property taxes.

Property taxes and income taxes should be automatic failures.

Any state or local government that relies on property taxes will be in an unwinnable bind.  Demand for more services will scuttle movements for lower taxes.  People will always want "everyone" to pay for the swimming pool or golf course for the few.

Start with a state with no property taxes and an acceptance of sales taxes and user fees and we heading in the right direction.

Otherwise, introducing user fees and sales taxes to pay for the stuff that property taxes paid for will be a minefield for porcupines.