August 20, 2010
The Top 10 Highest State Income Taxes: All Obama Blue StatesForbes, States (And Bill Gates Sr.) Look to Soak the Rich, by Ashlea Ebeling:
- Hawaii: 11% (income over $400,000 (couple), $200,000 (single))
- Oregon: 11% (income over $500,000 (couple), $250,000 (single))
- California: 10.55% (income over $1 million)
- Rhode Island: 9.9% (income over $373,650)
- Iowa: 8.98% (income over $64,261)
- New Jersey 8.97% (income over $500,000)
- New York: 8.97% (income over $500,000)
- Vermont: 8.95% (income over $373,650)
- Maine: 8.5% (income over $39,549 (couple), $19,749 (single))
- Washington, D.C.: 8.5% (income over $40,000)
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I have been rather busy this summer with personal matters. I am thrilled to see that while I was preoccupied, DC was made a state. This has been long overdue.
Posted by: Bill | Aug 20, 2010 10:45:36 AM
Iowa is getting moved up too high on this list due to their Federal deductability, which means their true rate is closer to (1-.35)(9%) = 6%. Probably their own fault for having an unduly complicated system.
A 9% marginal rate in Iowa doesn't pass the smell test, anyway: nobody would be willing to pay that price to live in a dumpy Midwestern state that features bitterly cold winters and lots of corn, but few of the cultural amenities and large employers common to the coastal states on this list.
Posted by: Anon | Aug 20, 2010 12:53:08 PM
You clearly have never been to Iowa. It has plenty of ammenities and is far friendlier than most of the coastal states.
Posted by: jmcnamera | Aug 20, 2010 2:10:03 PM
Interesting, there seems to be a direct correlation between those states that demand the most tax and those states (and districts) who are bankrupt. It's a Laffer.
Posted by: John Abney | Aug 20, 2010 2:15:59 PM
Let's cut Oregon some slack here. Yes, they are at the top for marginal personal income tax rates, but on the other hand, they don't have a sales tax.
Posted by: Richard | Aug 20, 2010 2:16:30 PM
Maine seems to be the ones knocking it out of the park here. The others look like they're following the 'soak the rich' approach - Maine looks like they want a piece of EVERYBODY.
Posted by: Wind Rider | Aug 20, 2010 2:17:38 PM
Look at Maine: the top bracket kicks in at $39,500 for a married couple??? No wonder lobster is so expensive!
Posted by: MPM (UC Law '89) | Aug 20, 2010 2:18:10 PM
Keep in mind that Oregon does not have a sales tax.
Posted by: James | Aug 20, 2010 2:21:02 PM
Oregon has no sales tax, California has 8.5% sales tax- big difference in total tax rate
Posted by: dude | Aug 20, 2010 2:23:49 PM
DC ought to be moved up based on applicability--8.5% may have them tied for Maine for 9th place. But look who it applies to! Granted, Maine is just as bad and Iowa not far behind, but it will hit by far the highest percentage of taxpayers in DC.
Posted by: tim maguire | Aug 20, 2010 2:25:01 PM
Keep it up Oregon! Thanks to their high taxation several Oregon companies are pulling up stakes and moving to my home state of Idaho. We really need the jobs. Cheers!
Posted by: Kate | Aug 20, 2010 2:28:36 PM
You might also want to note that the "late great" state of Ca has a top rate of 9.55% that kicks in for singles at $46,349 and mfj at $92,698. They really know how to tax the "rich".
Posted by: Ken | Aug 20, 2010 2:28:36 PM
Washington, a blue state, has one of the lowest state income tax rates (0%). It doesn't make any sense to have a list of the highest and not a list of the lowest--what if the lowest were all blue states too? Seven states have no income tax, and I know most of them are red (I forget if Florida was blue last time or not.) Just saying.
Posted by: Gabriel Hanna | Aug 20, 2010 2:28:42 PM
Bill, you didn't know DC was the 57th state?
Posted by: medulla oblongata | Aug 20, 2010 2:32:01 PM
I read this correlation as saying that:
(1) very few people fall into these highest tax brackets,
(2) the majority of people in the lower tax brackets are willing to soak the rich, and
(3) those lower-bracket people voted for Obama.
Maine is the outlier here.
What is the correlation between state deficit and highest tax rate? I'm pretty sure California, New York, and New Jersey will be in the top 10 of that list too.
Posted by: great white north | Aug 20, 2010 2:34:01 PM
The real test is the combined income-sales-property taxes. Oregon would be lower, California and Hawaii would have a battle for most expensive. Maine essentially has a "flat tax"....nearly everyone pays the same rate.
Posted by: Concerned Citizen | Aug 20, 2010 2:34:05 PM
That's a pretty remarkable spread in top-bracket incomes. I'd like to see a comparison of effective rates for selected income scenarios (Single making $50K, married earning $150K combined, etc.). I don't doubt that the top of the list would still bleed blue.
O.T., but in response to Anon/12:53:08:
As a Minnesota boy who has joked about Iowa plenty ("What's the best thing to come out of Iowa? Interstate 35"), I was pleasantly surprised by the Iowa City-Coraville area this summer. Not especially dumpy or devoid of culture at all, and only four hours away from the refinement and deep-dish pizza of Chicago.
"Bitterly cold winters?" Ha! I laugh at Iowa's near-tropical January temperatures!
Posted by: balthar | Aug 20, 2010 2:42:19 PM
I lived most of my life in Cedar Falls and Waterloo, and no, Iowa does not have lots of amenities
Posted by: ozymandias | Aug 20, 2010 2:47:15 PM
5th generation Oregonian here.
Don't. Ever. Cut. Oregon. Slack.
Especially, on anti-business and tax greed.
We had a county tax for a couple years recently. Multnomah County (Portland) is demented left watermelon central.
Tax and regulate or vice versa.
Google "Jack Bog". Democrat and law professor from local college - he does get insane local spending and taxing.
Posted by: Larry | Aug 20, 2010 2:47:36 PM
Did you forget Taxa--, excuse me, Massachusetts? We have a 12% rate on so-called "unearned income." This includes most interest, dividends, and capital gains, whether you're "rich" or not. Doesn't this count in your ranking?
Posted by: John | Aug 20, 2010 2:54:16 PM
Are these all marginal rates? I vaguely recall, back before I escaped to NH, that I was paying the top combined NYS and NYC tax from dollar one since I was over a certain cutoff - well less than 200K annually.
Posted by: great unknown | Aug 20, 2010 3:00:14 PM
It'd be interesting to see what the median income taxpayer pays in each state. For example, CA's top rate kicks in high, but the 2nd-highest bracket is still very high (9.5%) and kicks in as early as ME (earlier, actually, given median incomes, as 'dude' pointed out for DC).
Posted by: Peter St. Onge | Aug 20, 2010 3:02:28 PM
What would be even better would be a comparison of what percent of households pay the top or next to top rate to avoid the silly 'millionaire' rate that skews things. As posted above, California's 9.55% rate kicks in at $47K, or $94K for married joint filers. Considering the median household income in California is $60K or so, I bet the second highest rate snares more filers here as a percentage of the population than just about every state. But we're all rich, right? Right?
Posted by: David | Aug 20, 2010 3:02:37 PM
This is useful data, but absent more context it's only a piece of the story.
When looking at cost-of-government, where do you draw the line?
Certainly income tax is a factor, but comparatively few people hit the top brackets; you need to plot tax-rate-by-state-AGI from zero to $2M+ and look at total area under the curve.
Then you've got sales taxes, property taxes (which in California varies significantly depending on the value at the time the property was purchased due to Prop 13), other local charges (we're looking at $200/mo water bills in summertime now since our water district buys from SF/Hetch Hetchy), vehicle registration, etc.
Posted by: JEM | Aug 20, 2010 3:09:18 PM
Regarding Oregon - yes it doesn't have a sales tax but for years liberals have tried to get the state to adopt a sales tax.
Regarding Washington - yes it doesn't have an income tax but currently liberals are trying to get the state to adopt an income tax. They have also been trying to do this for years.
Posted by: anymouse | Aug 20, 2010 3:32:51 PM
Just a quick glance shows that the states listed as the highest tax states have significantly higher per capita income than the other 41 states. But then they also get more rain than the other 41 states.
So it seems to me that based on this small sample I can draw two conclusions.
1) There is some evidence that high tax rates do not lower per capita income.
2) Rain does not reduce state tax rates.
Posted by: neil wilson | Aug 20, 2010 3:43:03 PM
Actually worked in both Maine and Taxachusetts. Starved to death in Maine, what with the taxes, outrageous health insurance, huge car registration bills, etc. Moved to Mass five years ago: Salary a little more than doubled, better health insurance. My take-home rose by 2.7 X. Unbelievable.
Posted by: MST | Aug 20, 2010 4:20:19 PM
Without the state income tax and the feds, Maine would put out the lights and go home. There's little business to tax and the state is the 2nd largest employer (Gen Dynamics-BIW is 1st - navy ships). Lobster's sure good, tho' - ayuh.
Posted by: snickah | Aug 20, 2010 4:40:21 PM
As to Iowa - I live here - unfortunately - but am from Montana - this - place is a moonbat sh*thole, and there is nothing good I can say about the place. It combines the worst aspects of the everglades and Russian Steppe depending on the season. Not to mention it's filled with a bunch of t*t-sucking democrat farmers and city sheeple - yet has none of the attractions that you'd normally get with a left-wing big city.
Oh yeah, the entire state is run by all the God-d*maned commies in Des Moines. F*ck this corn-fed hell-hole.
PS: The cow-sh*t I grew up smelling in Montana is like old spice compared to the awful REEK of pig-scat.
AVOID STATE AT ALL COST. It's like they rolled up the worse aspects of everywhere and crammed in into one flat tornado-ridden hell-hole.
Posted by: IowaImport | Aug 20, 2010 5:00:49 PM
I think a more revealing "Top 10" would be the percentage of total labor force in each state that is employed in the public sector---local, state, and federal government; since those individuals are net-tax "recipients" rather than net-tax "producers." I imagine the top ten would be Obamacrat states.
Posted by: Lech Dharma | Aug 20, 2010 5:25:53 PM
Well, I lived in New York for five years in the 1980s, and I'm pleased to see they've actually lowered their taxes. When I lived there, the state income tax maxed out at 10% (for all income over $20,000 -- wanted to make sure they caught all the fat cats), and New York City imposed another tax of 4.4% on top of it. In fact, before the Reagan tax cuts took hold, my marginal tax bracket (adding up Federal, state, city, and social security) was 65% -- on an income of less than $40,000.
I moved to Pennsylvania during 1987, and the total taxes in PA were ONE QUARTER of those in NYC.
Posted by: RRESOR | Aug 20, 2010 5:44:15 PM
"I am thrilled to see that while I was preoccupied, DC was made a state."
- Bill at 10:45
I've often felt that, home as it is to the federal government, D.C. is synonymous with many states. Delusion, for instance.
Posted by: malclave | Aug 20, 2010 5:47:03 PM
Actually 8.50% is not the CA state wide sales tax rate, counties are allowed to add a percentage on the base rate with 60% voter approval. This creates a patchwork of rates. For example Alameda (Oakland-East Bay) the rate is 9.75%. Drive ten minutes east to Contra Costa and it's 9.25%. A few miles north to Solano it's 8.375. That's a serious difference on big ticket itms for most folks.
The sales tax drain became so severe in Oakland that the car dealerships were desperate. The city ran ads begging residents not to buy cars and taxable goods in other counties. Guess where the auto dealerships moved.
We're also paying the highest fuel tax in the country. Cents per gal of $0.63.9 for gasoline, $0.72.0 for diesel - 6% Sales Tax. 1.25% county tax. 1.2 cents per gal state UST fee (tax on underground tanks). plus local sales tax.
That's why people are lined up 50 deep at every island pretty much every minute Costco is open where premium was $3.17 yesterday. Prices in my area run from $3.17 to 3.47...the average is about $3.30 if you don't have 2-3 hours to wait online.
Posted by: BJM | Aug 20, 2010 5:50:40 PM
"Without the state income tax and the feds, Maine would put out the lights and go home."
Nah. We can always pass another bond to cover operating expenses. God help us if the kids ever figure out we've been lying about the cannibalism in the rest of the US, though.
Posted by: PersonFromPorlock | Aug 20, 2010 5:51:48 PM
Actually, that's pretty misleading. What seems more relevant is how much revenue each state collects per person from ALL sources.
Those numbers are pretty revealing. The top states all get significant wealth from business and/or the Feds.
State Total Taxes($million) Per Capita Rank
Alaska 4953 7092 1
Wyoming 2764 5078 2
Vermont 2506 4030 3
North Dakota 2414 3732 4
Connecticut 12928 3674 5
Hawaii 4713 3639 6
New York 65030 3328 7
Minnesota 17161 3259 8
Delaware 2806 3170 9
New Jersey 27187 3122 10
US Census and other data from here:
Posted by: Andrew A. | Aug 20, 2010 6:03:18 PM
Forbes also published a sortable list (http://www.forbes.com/lists/2010/44/debt-10_Global-Debt-Crisis_DebtPerCapita_2.html) of state debt per capita. Not surprisingly, the top ten are also blue, with five states making both lists.
$3,621 New Jersey
$2,921 New York
$1,812 Rhode Island
Posted by: Steve Y. | Aug 20, 2010 6:33:23 PM
Illinois has one of the lowest tax rates (3.0%), but the second highest deficit after CA, and when Gov. Quinn proposed hiking the tax to 4.5%, he nearly was shot.
Oh, and it's home rule on sales tax - the state rate is 6.25%, but counties and municipalities can tack on more. So Cook County adds 1.5%, the City of Chicago tags on another 1.5%, and then there's the McPier tax in the Loop, pushing the total tax north of 10%. California ain't got nothin' on Illinois!
Posted by: TaxHacker | Aug 21, 2010 12:42:22 AM
It is remarkable that California and New York still contain the core of many major industries. Hawaii, Maine, and Vermont don't really matter, but CA and NY house industries that dominate the world.
As we know, anything that is distorted can continue for a long time, but when it corrects, it corrects fast. So many globally crucial industries based out of NY and CA could leave very swiftly (to Asia) if a vicious cycle starts.
What if China sets up a special economic zone where companies and workers from Silicon Valley or Wall Street get a 15-year tax holiday and full relocation concierge service? It would not take me long to pack up and go.
Posted by: GK | Aug 21, 2010 1:43:19 AM
Maybe it's just me, but it seems that Maine and DC are far worse. Granted DC is not a state but but both Maine and DC tax the poor at a high rate. I hardly consider $40K a good salary any more, yes it's great in TN, AL, MS but to live in Maine or DC on $40K a year and then be taxed that high, well it's time to move out
Posted by: Hollylamb | Aug 21, 2010 11:10:29 AM
"What if China sets up a special economic zone where companies and workers from Silicon Valley or Wall Street get a 15-year tax holiday and full relocation concierge service?"
If this happens NYC-specifically Manhattan-will have to close it's special Office of Tax Manhattanites with an Additional 8.something% City Tax since there won't be anyone remaining in Manhattan whose City-Tax supports the City of Big Serfdom.
Are the Highest State Income Taxes also factoring in that Special City Tax?
Posted by: susan | Aug 21, 2010 11:11:56 AM
The comments prove that you can provide any group some data and they will all interpret it to suit their own beliefs.
Posted by: Mark | Aug 21, 2010 11:29:14 AM
Not fair. It only looks like we are a high tax state here in Oregon. Hardly anybody has jobs. 11% times no income equals no tax and as the majority rules, the majority who have no jobs are cool with the whole thing. And work just sucks anyway, according to those who claim they've tried it.
Posted by: wjunewick | Aug 21, 2010 12:01:00 PM
With tax issues like these, business relocation is becoming a hot topic in a lot of circles. Here's a great article talking about improving profitability by choosing a better location.
Posted by: Rich | Aug 21, 2010 12:09:54 PM
I lived in Maine for many years. The taxes are indeed onerous. Sadly, the state government seems to fritter away the funds so there's no real sense of taxpayers getting any services for their cash...
Maine also has very high property tax rates and a strong 'black market' economy.
Now I live in Massachusetts, which is a different kind of insanity, but at least, the state seems to stagger on.
Posted by: Kate | Aug 21, 2010 1:18:23 PM
pretty soon Washington state will be on that list, as our entrenched liberal democrat majority push forward with a state income tax plan that has been heralded by Bill Gates Senior. This will of course further decimate the state's middle class while consolidating the power of aristocrats like Gates Sr. and government officials/employees. And they even have the audacity to say that the state sales tax will be eliminated...Yah sure, yah betcha!
Posted by: Forrest | Aug 21, 2010 2:33:41 PM
The California Disease. First the infection spreads by an ingress of Californians escaping their dying state. They fester for a while and worm their way into the local political scene and seek out fellow travelers. Then, like clockwork, they rise up to destroy the host just as they did in California.
You can tell it is coming because Californians move there because it is quaint and not so crowded, then start building grocery stores on every corner.
Posted by: JKB | Aug 21, 2010 2:58:12 PM
"The California Disease. First the infection spreads by an ingress of Californians escaping their dying state. They fester for a while and worm their way into the local political scene and seek out fellow travelers. Then, like clockwork, they rise up to destroy the host just as they did in California."
It's been happening here in Colorado for a number of years. Californians bringing their traffic, granola, and politics to pollute our wonderful state (Except the People's Republic of Boulder which was already that way). Now, only 47% of inhabitants were actually born here, the rest are illegals, Californians, Texans (in Southern Colorado) and a few scattered other places.
I keep saying that I'm moving to Wyoming as soon as the kids are gone.
Posted by: Common Sense | Aug 23, 2010 5:50:34 PM
DC would vote for Hitler if he had a (D) next to his name on the ballot. Detroit and Chicago, too.
Posted by: Ken | Aug 23, 2010 9:10:14 PM
We have had over 50 years of a Democrat majority here in Hawaii. No wonder we are No. 1! And sadly, there is no light at the end of the tunnel for the forseeable future. Thank goodness we have the best climate on earth!
Posted by: Crabman | Aug 23, 2010 10:27:34 PM