NEW: Rhode Island has 8th Highest State-Local Tax Burden in U.S.
Wednesday, April 02, 2014
The Foundation released its annual State-Local Tax Burdens report , which shows that taxpayers in Rhode Island paid 10.5% of their collective incomes in state and local taxes in 2011. The national average was 9.8%.
“States have different tax burdens, just as they have different levels of services. For Americans to make informed judgments about benefits and costs of state-local government, the costs need to be known.” said Tax Foundation economist Liz Malm. “This annual estimate of how much residents pay in state-local taxes helps inform that discussion.”
During the 2011 fiscal year, state-local tax burdens as a share of state incomes decreased on average. This trend was largely driven by the growth of income in all states.
In 2011, the residents of New York, New Jersey, and Connecticut had the highest state-local tax burdens as a share of income in the nation. In these states, residents have forgone over 11.9 percent of income due to state and local taxes.
Residents of Wyoming paid the lowest percentage of income in 2011 at just 6.9 percent. They replaced Alaska, which had previously been the least-taxed for multiple decades, as the lowest-burdened state in the nation. After Wyoming and Alaska, the next lowest-taxed states were South Dakota, Texas, and Louisiana.
State-local tax burdens are very close to one another and slight changes in taxes or income can translate to seemingly dramatic shifts in rank. For example, the twenty mid-ranked states, ranging from Oregon (16th) to Georgia (35th), only differ in burden by just over one percentage point.
On average, taxpayers pay more to their own state and local governments (73 percent of total burden). Taxes paid within states of residence decreased on average in 2011, while taxes paid to other states increased, leading to a slight decrease in total burden. Some states deviated from these national trends, however.
The report examines burden trends over time and takes into account what taxpayers pay to other states in addition to their own, offering a more accurate picture of the true tax burden borne by residents.
Related Slideshow: Smallest + Largest Tax Increases in RI
Below are the largest—and smallest—tax increases in Rhode Island cities and towns for fiscal year 2014. The data measures the overall change in the amount levied in taxes between last year and this year. It does not compare changes in individual tax rates for homeowners, which may have been higher than the overall increase if the change in the rates was lower for another group of taxpayers in the community. This year, for the first time, all communities stayed below the annual tax cap, which for 2014 was 4 percent. (The cap applies to the overall levy not individual tax rates. Note that the levies for any independent fire districts in a community are not included.) Below communities are ranked starting with those that had the lowest increases. Data was provided by the state Division of Municipal Finance and is current as of January 7.
FY 2013 to FY 2014 Tax Increase: 1.53%
FY 2013 Tax Levy: $59,560,610
FY 2014 Tax Levy: $60,472,810
Amount of Increase: $912,200
Note: Has an independent fire district. Levy for fire districts not included. Cumberland actual amount is an estimate reported by the town. Final levy will be set in May 2014
FY 2013 to FY 2014 Tax Increase: 1.91%
FY 2013 Tax Levy: $101,738,436
FY 2014 Tax Levy: $103,679,393
Amount of Increase: $1,940,957
Note: East Providence fiscal year is Nov. 1 to Oct. 31. Figures represent an state estimate which will be finalized in spring 2014.
FY 2013 to FY 2014 Tax Increase: 3.91%
FY 2013 Tax Levy: $49,896,853
FY 2014 Tax Levy: $51,845,789
Amount of Increase: $1,948,936
Note: East Greenwich fiscal year 2013 & 2014 levies reflect the towns merger with the fire district in June 2013.
Photo: Flickr/Jimmy Wayne
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