A new study has come out from the financial site WalletHub. It rates each of the 50 states in terms of the tax burden that it places on its wealthiest residents, and it rates the 50 states again in terms of the tax burden that it places on its poorest. Only one state made the top five on both lists.
First, let’s look at the states that impose the most tax burden on the wealthiest. Here they are:
47. District of Columbia; 48. New Jersey; 49. Connecticut; 50. Mystery; 51. New York. (There are 51 jurisdictions, including the District of Columbia; number 1, Alaska, is the state that burdens its residents the least as a percentage of the resident’s income. This is true in this and the next two categories.)
By and large, these states have progressive tax systems, meaning a structure that places more of the burden on people who have the means to pay for it. Typically, these states get more of their revenue from income taxes that are applied at graduated colleges and rates.
From the same report, here are the five states that impose the largest tax burden on their poorest citizens:
47. Louisiana; 48. Pennsylvania; 49. Mystery; 50. Washington; 51. Illinois.
The tax systems in these states tend to be regressive, which means that tax is placed upon people without regard to whether they can pay it. Generally, states in this group rely heavily on sales taxes, gross receipts taxes, or other broad-based transaction taxes for their tax revenue.
As you can see, one state, labeled the mystery state in the two lists above, manages to somehow combine the worst of both worlds—it hammers the rich and also bludgeons the poor.
But wait! As an added bonus, the study also rated the states for the most and least burden on its citizens in the middle of the income spectrum. And the winners are: 47. Washington, 48. Louisiana ,49. Illinois, 50. New York, 51. Mystery.
So, not only is the Mystery State a significant finisher in this third heat, it is The Worst in the Nation by that measure.
So, what does it take for a state tax system to wind up on all three lists at the same time? You may think that the Mystery State has a pretty screwed up tax system. If you do, I wouldn’t argue with you. Here are some details from the study for that state:
| Income Level | Sales & Excise Tax as % of Income | Property Tax as % of Income | Income Tax as % of Income | Total Tax as % of Income |
| Low | 8.59% | 3.29% | 1.86% | 13.74% |
| Middle | 7.55% | 2.36% | 3.71% | 13.62% |
| High | 4.27% | 2.48% | 5.33% | 12.08% |
For followers of this column, the identity of the Mystery State should be no surprise. Indeed, if you’re reading this column, you’re probably living in it! Aloha, and welcome to tax hell.
Fortunately, there is a ray of hope. Our legislature is in session right now. There are proposals on the table to make our tax climate better, and there are other proposals that would make it worse. We are about 1/3 of the way through the session, and proposals of both kinds have advanced, shortly to be considered by the chamber other than the one in which the proposal was introduced.
If you haven’t considered making your views known to your legislator, maybe now is a good time to start. If more of us are telling our legislators to do the right thing, maybe they will listen to us.