These 5 States Get Overtaxed the Most
No one likes to pay taxes, but most people understand that tax revenue goes toward supporting valuable efforts that are in the best interest of the nation. Yet many states are angrier than ever at the federal government, because recent tax-reform laws dramatically limit how much taxpayers can deduct from what they pay in state and local taxes. Leaders in high-tax states argue that they're already paying more than their fair share to support the federal government -- even before tax reform led to an even more out-of-balance situation.
The New York State Comptroller's office released a report late last year that detailed the relative burdens of taxpayers in all 50 states in supporting the federal government. By looking at what taxpayers in each state paid in federal taxes and how much the federal government spent on programs helping people in each state, the report was able to determine which states overpaid the most compared to what they got back in federal benefits. Interestingly, they're not all the high-tax states that were the most ardent opponents of tax reform.
Data source: Office of the New York State Comptroller.
Two very different groups of overtaxed states
It's not surprising to see states like New Jersey, Connecticut, and New York on this list. Residents in these states have some of the highest per-capita incomes in the nation. Because of the progressive nature in which the federal government imposes income taxes, higher income typically means higher tax rates that, in turn, drive greater tax payments
Keep watching the tax situation
These numbers were from fiscal 2016, so the bust in energy might well leave natural resources-dependent states, like North Dakota and Wyoming, off similar lists in the future. For now, though, it's interesting to see such a politically diverse set of states bearing the greatest burden in financing the federal government.