Report: Tennessee has second lowest overall tax burden | Tennessee


(The Center Square) – Tennessee has the second-lowest overall tax burden in the United States, according to a new classification from the WalletHub personal finance website.

Tennessee, which has no personal income tax, ranked below Alaska and ahead of Delaware, Wyoming, New Hampshire and Florida for having the lowest tax burden.

New York, Hawaii, Maine, Vermont, Minnesota and New Jersey had the highest tax burdens.

The study looked at property tax as a share of personal income, personal income tax, and total sales and excise tax based on data from the Tax Policy Center.

“Unlike tax rates, which vary widely depending on an individual’s circumstances, the tax burden measures the proportion of total personal income that residents pay for state and local taxes,” the report said.

Despite the low tax burden, Tennessee collected $2.1 billion more taxes and royalties in the first seven months of the year than expected.

Tennessee’s total tax burden was 5.75% of personal income with an average tax burden of 1.71%, income tax of 0.06%, and total sales and excise tax of 3.98 %.

Alaska had an overall tax burden of 5.06%, while Delaware (6.22%), Wyoming (6.32%), New Hampshire (6.41%) and Florida (6.64 %) were the other states below an overall rate of 7%.

New York was the highest at 12.75%, followed by Hawaii at 12.7%.

The study asked tax experts how these taxes could contribute to a state’s economic growth. Associate director of the Boyd Center for Business and Economic Research at the University of Tennessee, Donald Bruce, said efficiency really depends on the use of tax dollars.

“Some states generate more tax revenue, but use that revenue to provide a menu of public services that can contribute significantly to economic growth,” Bruce said. “Examples are infrastructure projects and investments in human capital through public schools and universities and vocational training programs. The right balance is to increase the amount of revenue to provide the desired public services without having a tax burden high enough to induce some taxpayers to leave the region.


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