12.2 Percent of Income in New Jersey Goes to State and Local Taxes
Washington, DC (Jan 20, 2016)—12.2 percent of all income in New Jersey went toward state and local taxes (in FY 2012), according to the annual State-Local Tax Burden Rankings released this morning by the nonpartisan Tax Foundation.
The report highlights the state-local tax burden on taxpayers in each of the 50 states, details how much residents pay to their state and other states, and illustrates tax burden trends over time and within each state.
Here is a breakdown of New Jersey’s state-local tax burden:
- State-Local Tax Burden rank: 3rd
- Percent of income in New Jersey that goes to state and local taxes: 12.20%
- Amount of taxes paid to New Jersey per capita: $4,876
- Amount of taxes paid to other states per capita: $2,050
| Table 1. | ||||||
| State-Local Tax Burdens by State (with Detailed Breakdown), Fiscal Year 2012 | ||||||
| State | State-Local Tax Burden as a Percent of State Income |
Rank | State-Local Tax Burden per Capita |
Taxes Paid to Own State per Capita |
Taxes Paid to Other States per Capita |
Income per Capita |
| U.S. Average | 9.9% | $4,420 | $3,238 | $1,213 | $44,481 | |
| Alabama | 8.7% | 39 | $3,067 | $2,142 | $925 | $35,337 |
| Alaska | 6.5% | 50 | $3,229 | $1,986 | $1,242 | $49,780 |
| Arizona | 8.8% | 36 | $3,276 | $2,283 | $992 | $37,012 |
| Arkansas | 10.1% | 17 | $3,519 | $2,552 | $967 | $34,862 |
| California | 11.0% | 6 | $5,237 | $4,126 | $1,111 | $47,808 |
| Colorado | 8.9% | 35 | $4,304 | $2,968 | $1,336 | $48,313 |
| Connecticut | 12.6% | 2 | $7,869 | $5,516 | $2,354 | $62,374 |
| Delaware | 10.2% | 16 | $4,412 | $2,610 | $1,802 | $43,437 |
| Florida | 8.9% | 34 | $3,738 | $2,499 | $1,240 | $41,848 |
| Georgia | 9.1% | 32 | $3,426 | $2,446 | $980 | $37,478 |
| Montana | 8.7% | 38 | $3,389 | $2,172 | $1,216 | $38,980 |
| Nebraska | 9.2% | 30 | $4,197 | $2,930 | $1,267 | $45,485 |
| Nevada | 8.1% | 43 | $3,349 | $2,051 | $1,298 | $41,297 |
| New Hampshire | 7.9% | 44 | $3,961 | $2,173 | $1,789 | $50,288 |
| New Jersey | 12.2% | 3 | $6,926 | $4,876 | $2,050 | $56,731 |
| New Mexico | 8.7% | 37 | $3,141 | $2,170 | $971 | $36,051 |
| New York | 12.7% | 1 | $6,993 | $5,588 | $1,406 | $55,047 |
| North Carolina | 9.8% | 20 | $3,659 | $2,707 | $952 | $37,523 |
| North Dakota | 9.0% | 33 | $4,867 | $3,349 | $1,518 | $53,953 |
It’s important to remember that a significant amount of taxation occurs across state lines, and that this shifting is not uniform. For instance, one might pay sales taxes at their local corner store, but also pay sales taxes when on vacation in another state. This shifting should not be ignored when attempting to understand the burden faced by taxpayers within a state.
“There’s an ongoing debate over how much is enough when it comes to taxes, but it isn’t always informed by accurate data,” said Tax Foundation Economist Nicole Kaeding. “Our study gives taxpayers a comprehensive look at where tax burdens are felt across the states, so that they can have an informed discussion on the size and reach of state and local taxes.”
| Table 2. | ||||||||
| State-Local Tax Burdens as a Percent of State Income by State, Selected Years | ||||||||
| Fiscal Year 2012 | Fiscal Year 2011 | Fiscal Year 2010 | ||||||
| State | State-Local Tax Burden as a Percent of State Income |
Rank | State-Local Tax Burden as a Percent of State Income |
Rank | State-Local Tax Burden as a Percent of State Income |
Rank | ||
| U.S. Average | 9.9% | 10.1% | 10.4% | |||||
| Alabama | 8.7% | 39 | 8.9% | 39 | 9.0% | 39 | ||
| Alaska | 6.5% | 50 | 6.8% | 50 | 7.1% | 50 | ||
| Arizona | 8.8% | 36 | 8.9% | 36 | 9.0% | 40 | ||
| Arkansas | 10.1% | 17 | 10.4% | 11 | 10.6% | 13 | ||
| California | 11.0% | 6 | 11.5% | 4 | 11.7% | 4 | ||
| Colorado | 8.9% | 35 | 9.0% | 35 | 9.3% | 35 | ||
| Connecticut | 12.6% | 2 | 12.2% | 2 | 12.6% | 3 | ||
| Delaware | 10.2% | 16 | 9.7% | 20 | 9.5% | 31 | ||
| Florida | 8.9% | 34 | 9.2% | 31 | 9.8% | 25 | ||
| Georgia | 9.1% | 32 | 9.2% | 33 | 9.3% | 33 | ||
| Montana | 8.7% | 38 | 8.9% | 37 | 9.3% | 36 | ||
| Nebraska | 9.2% | 30 | 9.6% | 22 | 10.0% | 19 | ||
| Nevada | 8.1% | 43 | 8.2% | 43 | 8.7% | 42 | ||
| New Hampshire | 7.9% | 44 | 8.0% | 44 | 8.6% | 44 | ||
| New Jersey | 12.2% | 3 | 12.1% | 3 | 12.7% | 2 | ||
| New Mexico | 8.7% | 37 | 8.9% | 38 | 9.0% | 41 | ||
| New York | 12.7% | 1 | 12.7% | 1 | 13.0% | 1 | ||
| North Carolina | 9.8% | 20 | 10.1% | 16 | 10.3% | 18 | ||
| North Dakota | 9.0% | 33 | 9.2% | 32 | 9.3% | 32 | ||
The study’s key findings include:
- During the 2012 fiscal year, state-local tax burdens as a share of state incomes decreased on average across the U.S. Average income increased at a faster rate than tax collections, driving down state-local tax burdens on average.
- New Yorkers faced the highest burden, with 12.7% of income in the state going to state and local taxes. Connecticut (12.6%) and New Jersey (12.2%) followed closely behind. On the other end of the spectrum, Alaska (6.5%), South Dakota (7.1%) and Wyoming (7.1%) had the lowest burdens.
- On average, taxpayers pay the most taxes to their own state and local governments. In 2012, 78 percent of taxes collected were paid within the state of residence, up from 73 percent in 2011.
- 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, Delaware (16th) and Colorado (35th) only differ in burden by just over one percentage point. However, while burdens are clustered in the center of the distribution, states at the top and bottom can have substantially different burden percentages—e.g. New York (12.6%) and Alaska (6.5%).
New Jersey Faces 3rd Highest State-Local Tax Burden In U.S.
The residents of three states stand above the rest, experiencing the highest state-local tax burdens in the country: New York (12.7 percent of state income), Connecticut (12.6 percent), and New Jersey (12.2 percent). These are the only three states where taxpayers forego over 12 percent of their total collective income to state and local taxes. This is over one percentage point higher than the fourth highest burden, in Wisconsin, of 11.0 percent of state income.
New York, Connecticut, and New Jersey have occupied the top three spots on the list, albeit not always in the same order, for several years. This may be partially attributed to high expenditure levels, which must be sustained by high levels of revenue. Furthermore, in the case of Connecticut and New Jersey, relatively high tax payments to out-of-state governments add to already high in-state payments. This is likely related to the fact that these are high-income states whose residents experience high levels of capital gains. High levels of capital gains will result in residents paying an increased share of other states’ business taxes.
See the full report here.
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