Pa. ranks 10th highest in nation for state, local tax burden
HARRISBURG — Pennsylvanians have the 10th highest burden in the nation when it comes to local and state taxes, a Tax Foundation report released Wednesday found.
Pennsylvanians paid 10.3 percent of their collective incomes in state and local taxes in 2011, the most recent year with complete data available. That tops the national average of 9.8 percent.
In dollar terms, Pennsylvanians spent $4,374 per capita in state and local taxes in 2011. Nationally, the local-state tax burden was $4,217 per capita.
The Tax Foundation’s annual report on state and local tax burdens estimates not only the amount of tax dollars collected in Pennsylvania, but also the amount of tax dollars residents spend out of state. The report shows that Pennsylvania residents pay 74 percent of their local and state tax burden to Pennsylvania, with the rest going to other states in the form of sales taxes, excise taxes, personal and corporate income taxes and other types of charges.
“We want to account for the fact that you don’t just pay to your state of residence,” said Liz Malm, co-author of the 2014 report, in order to help Americans better understand their “true tax burden.”
Pennsylvania’s rate is slightly down from surveys based on 2010 data, when residents in the Commonwealth paid 10.5 percent of their collective income to meet the state and local tax burdens. The decline is reflective of a national trend, with the U.S. average local and state tax burden down from 10.2 percent in 2010.
That’s likely due to growth in income as the nation recovered from the 2008 housing bust and ensuing recession, Malm said.
In terms of income, Pennsylvania ranked 20th in the nation in 2011, with a per capita income of $42,268.
“In last year’s report the story was just so much different because state incomes were still decreasing,” she said. “States were still seeing the effects of the recession.”
New York (12.6 percent), New Jersey (12.3 percent) and Connecticut (11.9 percent) held their ranks as the highest state and local tax burdens. Wyoming replaced Alaska as the state with the lowest burden, at 6.9 percent.
The Tax Foundation pulls from a variety of sources to complete the annual report.
The analysts start with tax collection data from the U.S. Census Bureau and the Bureau of Economic Analysis and then factor in a variety of other sources, including data on energy consumption, the travel industry and costs of commuting.
The Tax Foundation also releases an annual “Tax Freedom Day” report that includes data on federal tax burdens. That report will cite the number of days of work it takes for the average Pennsylvania taxpayer just to pay off their taxes. In 2013, Pennsylvania’s Tax Freedom Day was April 17, or 107 days out of the year.
The 2014 Tax Freedom Day report is set to be released Monday.
Natasha Lindstrom may be reached at nlindstrom@calkins.com.