In a ranking that will surprise no one who has ever paid a tax bill, New Jersey landed near the top in a list of high-tax states released Wednesday. According to the Tax Foundation, 12.2 percent of all income in New Jersey went toward state and local taxes in fiscal 2012. That tax burden was the third-highest in the nation, right behind New York and Connecticut. New Jersey has consistently ranked near the top in terms of taxes paid going back to the 1970s. That is in large part because it also consistently ranks among the nation’s wealthiest and highest-cost states. In 2014, according to census figures, New Jersey had a median household income of about $72,000, second-highest in the nation, after Maryland. Looking for the lowest taxes? Go to Alaska, South Dakota and Wyoming.
The Tax Foundation, a right-leaning tax policy research organization, ranked the states according to state and local taxes paid. On average, Americans paid about 10 percent of their incomes in state and local taxes in 2012, the foundation said. Since 1977, that percentage has moved within a narrow range of about 9.4 percent to 10.5 percent. Economists say that wealthier places tend to pay a higher share of their incomes in taxes, because affluent people are generally more willing to pay for a higher level of public services, such as better schools and roads. In addition, wealthier taxpayers are more likely to face capital gains taxes.
Gordon MacInnes, president of New Jersey Policy Perspective, a progressive think tank, said states with a high cost of living, such as New Jersey, must pay public workers more. “If police make $35,000 in Wyoming and $80,000 in New Jersey, that’s reflected in higher taxes, because we want our cops and teachers to live near their jobs,” he said. State tax rankings, MacInnes said, do not “reflect very accurately how well states do in creating jobs and opportunities for their residents.” Wednesday’s ranking included a wide range of taxes, including property taxes, sales taxes, excise taxes on alcohol and tobacco, individual income taxes, corporate income taxes and estate taxes.