June 3, 2010
High-Income Taxpayers in Connecticut Pay Two-Thirds of State’s Federal Income Tax Burden
Tax Foundation Report Shows Distribution of Federal Income Tax Burden by State; Connecticut, New York Are Most Progressive, West Virginia, Maine Have Flattest Distribution
Washington, DC, June 2, 2010 High-income taxpayers in Connecticut and New York bear the highest federal income tax burden among the states, according to a new Tax Foundation report based on recently released IRS data for tax year 2008.
"Connecticut by far has the most progressive distribution of federal income taxes," said Tax Foundation President Scott Hodge, who authored the report. "Taxpayers making under $50,000 a year earned 13 percent of adjusted gross income in the state, but paid only 5 percent of the state's federal income taxes. On the other end of the spectrum, taxpayers making over $200,000 earned 44 percent of the state's AGI, but paid 66 percent of the state' federal income taxes."
Connecticut taxpayers earning under $50,000 paid an effective tax rate—or share of income paid in taxes—of 6 percent, while those earning more than $200,000 paid an effective rate of 25 percent.
Tax Foundation Fiscal Fact, No. 231, "States Vary in Distribution of Who Bears the Burden of Federal Income Taxes," is available online at http://www.taxfoundation.org/publications/show/26371.html.
Nationally, taxpayers earning under $50,000 collectively earned 22 percent of the nation's total AGI, but paid just 8 percent of all federal income taxes at an effective rate of 5 percent. Those making over $200,000 collectively earned 29 percent of total AGI but paid more than half of all federal income taxes at an effective rate of 22 percent.
New York has the second most progressive distribution of federal income taxes, with taxpayers making less than $50,000 earning 17 percent of the state's AGI and paying just 6 percent of the state's federal income taxes. Meanwhile, those earning over $200,000 earn 40 percent of AGI and pay 63 percent of federal income taxes.
The other states in which taxpayers earning over $200,000 paid a greater share of the state's federal income tax burden than the national average include New Jersey (58 percent), Texas (57 percent), Florida (56 percent), Massachusetts (56 percent), Wyoming (56 percent), California (55 percent), Illinois (54 percent) and Louisiana (53 percent).
West Virginia has the flattest distribution of the federal income tax burden. Those earning less than $50,000 earn 31 percent of the state's AGI and pay 13 percent of the state's federal income taxes, while taxpayers making more than $200,000 earn 15 percent of AGI and pay 33 percent of federal income taxes.
Maine has the second flattest distribution, with those earning less than $50,000 earning 29 percent of the state's AGI and paying 14 percent of the state's federal income taxes. This is compared to those making over $200,000, who earn 17 percent of AGI and pay 34 percent of federal income taxes.
Other states with relatively flat federal income tax burden distributions include Hawaii, Indiana, Iowa and Kentucky.
The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.
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