Tax burdens were calculated by dividing tax revenue by personal income for each state. Total personal income by state was sourced from the U.S. Bureau of Economic Analysis (BEA), State Personal Income (2017). The BEA defines personal income as “the income received by, or on behalf of, all persons from all sources: from participation as laborers in production, from owning a home or business, from the ownership of financial assets, and from government and business in the form of transfers. It includes income from domestic sources as well as the rest of world. It does not include realized or unrealized capital gains or losses.”
The tax revenue data used in this analysis is from the U.S. Census Bureau, State and Local Government Finances 2015. The data was released on 10/19/2017 and is the most recent available. Both state and local tax data were used. It’s important to note that comparing tax burdens across states can be challenging because statistics on tax revenue reflect taxes a state collects from all activity within the state, not just the taxes paid by its residents. To increase the relevancy of the analysis to the residents of each state, only individual income, property, general sales, and selective sales taxes were included. Selective sales tax is predominantly driven by the sale of gasoline, alcohol, tobacco, and public utilities.