Tuesday, May 25, 2010

Funding Your State

The Great Recession may be officially over, but states throughout the land are still facing difficult budget decisions. They need to decide what to fund and how to raise the money. Too often in discussions of taxation we focus on income tax or just federal taxes when in fact we have a whole slew of taxes. Instead we need to talk about the tax burden citizens face rather than particular tax rates (e.g., the rich may face the highest income tax rate, however, if their income is from dividends their tax burden is significantly less).

You particularity see this tax reality with separate states. For example, in my lovely state of South Dakota we have no income tax, yet one of the higher property tax rates. As far as sales tax we are on the lower end, however, many more items are tax (e.g., groceries and clothes, while high tax MN exempts those items). Needless to say, tax policy is super fun.  Check out these state graphics:

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