Gov. John Hickenlooper, surrounded by lawmakers, signed the fiscal year 2015-16 budget into law last year. (John Frank, Denver Post)
For as much as taxation and TABOR dominate state political debates — this year’s General Assembly session is no exception — a new national study says Colorado residents have the 15th-lowest tax burden among U.S. states.
The Tax Foundation’s new rankings, based on 2012 fiscal year data, place Colorado 35th in the portion of all income earned across the state that goes to pay state and local taxes. The national average is 9.9 percent, but in Colorado the state/local tax burden is 8.9 percent.
Not so for top-ranking New York, where 12.7 percent of all income is paid in those taxes, or Connecticut (12.6 percent) and New Jersey (12.2 percent), which round out the top three.
The Washington, D.C.-based group bills itself as nonpartisan, though some observers describe it as pro-business or conservative-leaning. Its analysis for the rankings, drawing from data collected by the U.S. Census Bureau’s State and Local Government Finance division, excludes federal taxes but includes most forms of state and local taxes, including those paid by residents to governments in other states.
Tax Foundation economist Nicole Kaeding said in a news release promoting the new rankings: “There’s an ongoing debate over how much is enough when it comes to taxes, but it isn’t always informed by accurate data. Our study gives taxpayers a comprehensive look at where tax burdens are felt across the states, so that they can have an informed discussion on the size and reach of state and local taxes.”
In the rankings, the states with lower tax burdens tend to be between the coasts.
At the bottom are 50th-ranked Alaska, at 6.5 percent; South Dakota, at 7.1 percent; and Wyoming, at 7.1 percent. Among Colorado’s other neighbors, Kansas ranked higher with the 23rd worst tax burden, Utah was 21st and Nebraska was 30th. Ranking better than Colorado were Arizona at 36th, New Mexico at 37th and Oklahoma at 40th.
For the study, the average income per Colorado resident in 2012 was $48,313, while $2,968 of that was paid to state and local governments within Colorado and $1,336 was paid to state and local governments outside the state. That adds up to an average state/local tax burden in Colorado of $4,304.
Colorado’s ranking at 35th has held steady in the last couple years, but the portion of income going to state and local taxes has declined from a recent peak of 9.3 percent in 2010. In 1977, the first year for which the Tax Foundation makes calculations, Colorado’s state/local tax burden was 10.6 percent.