New Jerseyans Pay Second Highest Taxes [AUDIO]
New Jersey ranks second in the nation when it comes to the tax burden placed on its residents. That’s according to data from the Tax Foundation, a Washington-based research group that advocates a simpler tax code.
According to the latest data, residents of New Jersey paid 12.4 percent of their income in state and local taxes in 2010, coming in second behind New York where residents paid 12.8 percent. Connecticut came in third with a rate of 12.3 percent.
“The lowest tax burdens of residents are actually felt in places where states are capable of exporting their tax burden,” said Scott Drenkard, Economist at the Tax Foundation. “Alaska is a good example of this. The state collects a lot of revenue from taxes on oil and Alaskan residents don’t actually pay those taxes, the rest of us do when we go and fill up at the pump. So, places like New Jersey, New York and Connecticut have very high rates on income, property and corporate income and aren’t able to export their tax burden for very much at all. So, just having those high rates is going to establish a lot of collections in those areas and they’re felt by residents in those areas.”
“New York and New Jersey have some of the highest property taxes in the country. Those are paid by the residents in those states and are significant costs that contribute to tax burdens in those states. Now, there are also New Jersey and Connecticut residents who commute into New York City. They often pay New York’s high income tax rates too, so we tally those as part of their tax burden,” said Drenkard.
“There is a problem with allowing citizens to be disconnected from the major costs of running government,” said Drenkard. “In a place like Alaska, many of the residents don’t feel the full costs of government and get many of the benefits of government and those benefits are paid by you and I when we fill up at the gas pump. In New York, there’s a little bit of exporting that goes on because residents of other states work in the city, but they also use the services of New York.”
New York and New Jersey are attempting to cap property tax increases.
“These are the types of proposals that can have affects, but they take a while to have any impact because the tax rates are so high. A better approach and one that you can make immediately is to cutting income tax rates across the board,” said Drenkard. “It’s important to look at other states and their burdens. In those high rate states, like New Jersey and New York, residents need to ask themselves if they’re really getting that much more out of their government by paying a higher burden.”
Residents of Alaska had the lowest tax burden in the nation at 7 percent, followed by South Dakota, Tennessee, Louisiana and Wyoming. The sixth lowest was Texas, where the rate was 7.9 percent.