High Tax, Low Tax States

State tax laws changed a lot the last few years. States responded differently to the financial crisis and its aftermath. Some raised taxes, while others cut taxes. Some did a little of both, creating new winners and losers. Here’s a survey of all 50 states by Bloomberg that states the per capital tax burden for each state. That’s the best way to compare them. This number aggregates all taxes. Some states deceive people by having low or no income tax, for example, but replacing it with high sales and property taxes. One shortcoming of the survey is that local taxes don’t appear to be included, only state level taxes.

The survey also tries to give a heads-up on proposed tax changes. That’s important, because there are a lot of tax proposals on the table.

It’s always important to look at the particulars of a state’s taxes and those of its localities. Because different activities are taxed different ways, one tax might be a low-tax state for you but a high-tax state for someone else.

Arizona’s state and local tax burden of $3,006 per capita is small compared with that of many other states, thanks to lower-than-average property taxes. That means the decline in home prices hit Arizona’s municipalities harder than those in many other states. Arizona does have high sales taxes, though — the Tax Foundation ranks it second in combined state and local sales taxes, at 9.16 percent.

Governor Jan Brewer set out to overhaul and simplify the state sales tax system in 2013. The state uses a complicated “transaction privilege” tax system that has sellers and lessors ultimately responsible for sales taxes, though they may pass the cost on to buyers or lessees. Brewer has faced opposition from local governments.