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No matter how low, taxes are always too high

Posted Friday, August 7, 2009, at 5:18 PM

A show of hands, please.

How many of you out there think taxes are too low?

Anyone?

Hello?

Well, that's expected, isn't it?

Absolutely no one thinks taxes are too low. Even people who concede taxes are necessary are apt to think that taxes are much too high, or at least too high for them, but, of course, not too high for everyone else, especially the rich.

There's no getting around it -- Americans pay a lot of taxes. Even in the very few states with no income tax, there is almost always gas tax and sales tax. And then there are the "sin" taxes paid on cigarettes and alcohol. And personal property taxes and real estate taxes and everybody (well, almost everybody) pays federal income tax and other payroll taxes such as social security.

Thanks to the Web site MSN Money, statistics used in the following comparisons of taxes in the U.S. are easy to find at http://tinyurl.com/ysk8on and.

Taxes are like rats and cockroaches -- they're everywhere.

Some states don't assess any income tax. They are Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. New Hampshire and Tennessee tax only dividend and interest income

And there are also states with no sales tax. They are Alaska, Delaware, Hawaii, Montana, New Hampshire, Oregon.

Missouri, with both a state income tax and a sales tax, also has plenty of other taxes, like most states. But relative to the states around us, we're not doing badly at all.

Except for Oklahoma at 17.0 cents per gallon, Missouri's gas tax of 17.3 cents is the lowest around by quite a bit. Illinoisans pay 32.4 cents per gallon, almost twice as much as residents of the Show Me state. In Iowa, it's 22.0 cents per gallon, and in Kansas 25.0 cents per gallon.

State sales tax is pretty low, too. Tennessee residents pay 7.0 percent to Missouri's 4.225 percent. Oklahoma's bite is only a little more than the bite in Missouri at 4.5 percent, but the base rate in Illinois is 2 percent higher at 6.25 percent.

For a Bible Belt state, it's surprising that Missouri really doesn't press too hard on the so-called "sin" taxes. In Missouri, relative to other states, you don't pay much for your guilty pleasures. In fact, based on the amount of tax, Missouri is, by a wide margin, one of the cheapest places to buy beer or cigarettes. Oklahoma charges a tax of $1.03 per pack, Illinois gets 98.0 cents, and even Kansas charges 79.0 cents; Missouri practically gives away cigarettes at 17.0 cents per pack.

If "demon rum" is your preferred vice, you can get plenty of it in Missouri for a tax of only 0.06 per gallon, where in Oklahoma that particular "sin" will cost you 40 cents per gallon. In Nebraska, it's 31.0 cents and it's 21.0 cents in Arkansas.

Income tax is harder to compare, since the types of income taxed vary widely from state to state, but Missouri's top rate is 6.0 percent, compared to Iowa's 8.98 percent top rate or Arkansas' high of 7.0 percent.

And even though recent increases in assessments may be giving you heartburn, the fact is that Missouri residents have a big advantage in real estate tax, too.

The median tax in Missouri, based on a median home value of $123,100, is $1,012. That tax represents about 0.82 percent of the home's value. It'll cost you 1.96 percent of the median income for the state.

Contrast that with a median tax in Illinois of $2,904, based on a median value of $183,900, which is about 1.58 percent of the home's value, roughly double the amount in Missouri. Put another way, that's three times the tax, more or less, on only 1 times the value of the home.

Or compare Missouri to Kansas, where the median tax is $1,337 and the median value of a home is $107,800. The tax is 30 percent higher, against a 12 percent lower value of the home.

Maybe you'd like to move to my home state of New Jersey, which claims the top spot in the 50 states for real estate taxes of $5,352 on a median home value of $333,900. The tax represents 1.60 percent of the home's value and eats up 6.75 percent of the average New Jersey homeowner's income.

You'll have to shell out 5.86 percent of your median income for property tax if you live in the number two state of New Hampshire, 5.07 percent in number three Vermont, and 5.0 percent in number four Connecticut, with Wisconsin filling in the number five spot at 4.79 percent.

Is that 1.96 percent rate in Missouri looking a little better? No?

Well, if you really want low property taxes, you can hustle on down to Louisiana, down at the very bottom of the list of the 50 states. Fight off the hurricanes, the heat and the humidity and pay only $175 in property taxes on a pre-Katrina median home value of $101,700, a mere 0.17 percent of the home's value and a tiny little bite of 0.37 percent of your new median income in the Pelican State of $46,933.

You want to be a Ragin' Cajun instead of a Missouri Tiger?

Aw, you don't really mean that.

Dude, come ON! Their team symbol is a chili pepper.


Comments
Showing comments in chronological order
[Show most recent comments first]

Ok Kathy, I'll go there. Our taxes aren't high enough. If we are to continue to live as we have we have to pay higher taxes or our standard of living is destined to failure. Under both the Democrats and the Republicans we overspend and ignore the fact that we would be much better off with a balanced budget. So raise my taxes or cut the excess spending - one or the other or both.

-- Posted by broke-n-busted on Sun, Aug 9, 2009, at 5:16 PM

Places with higher taxes, typically have better paying jobs. Having lived in a northern state (which to my surprise didn't make you list), their low in paying jobs range $12 - $15 dollars an hour ($8 - $10 here). No to mention some states don't tax needed things like food. Just my 2 cents.

-- Posted by Scarpetta on Mon, Aug 10, 2009, at 12:43 PM

No one likes taxes. What is the solution? Do we abolish public schools and expect parents' to pick up the tab to educate their children?

Kathy, as you point out in this well written and researched article the tax situation is complicated 50 ways to Sunday.

Reading the Real Estate section of the NY Times, an article on what you can buy for $250,000 in Portland ME gives a curious picture of the property taxes: $4,871 a year, if used as a primary residence ($5,090 if used as a secondary residence). One would think that a primary residence would indicate a greater need for town services including education if children were residing in the household.

-- Posted by upsedaisy on Mon, Aug 10, 2009, at 8:16 PM

Scarpetta - the states I highlighted were picked only because of their proximity to Missouri, or their position on Money's list. I threw in my home state of New Jersey (could easily have done New York, with which I'm very familiar)just for fun.

broke-n-busted: Can't say that I enjoy paying higher taxes either - just wanted to highlight the fact that we're not in such awful shape as some other states. And although it's true that higher-taxing states often have higher-paid jobs, they're also often the first in line for layoffs and real estate slumps for the same reason.

-- Posted by Kathy Fairchild on Tue, Aug 11, 2009, at 4:44 PM

Scarpetta: You mentioned taxes on food - I'm not sure what New Jersey doesn today, but in the 1970s, New Jersey didn't tax food when New York did, and at a pretty high rate, too. The result? Any Jersey grocery store close to the Empire State was flooded with New York shoppers from Fridays after work all through the weekend. Even if gas prices were high, it was still a bargain to drive across the GW Bridge and get your groceries in the land of the Sopranos rather than in New York.

-- Posted by Kathy Fairchild on Thu, Aug 13, 2009, at 5:08 PM

A few years back I worked in both Missouri and Minnesota. Since I'm a Minnesota resident, Minnesota got to tax ALL my income while Missouri got to tax only the portion attributable to my work in St. Louis. But the amount in question was taxed at the top bracket in both states. To insure some fairness, I got a credit against the Minnesota tax due for the taxes paid in Missouri.

The Minnesota tax (on the same portion of income) was over TWO times that due to Missouri. Gulp.

Except for snow removal both states provide similar public services. They just cost two times as much in Minnesota. Are the parks and highways up North that much better? Nope. IMHO, Minnesota just squanders more tax revenue on nutty programs than Missouri does.

Be happy that, in Missouri, legislators run on a platform of "I did no harm" rather than one of "Boy, did I have a great spending idea." ;-)

-- Posted by AF Brat on Tue, Aug 18, 2009, at 11:57 AM

AF Brat: For 9 years, I worked in Iowa and lived in Wisconsin. During that time, one of my colleagues turned down a promotion to move to company headquarters in Illinois, because Wisconsin would tax any gain from the sale of his Wisconsin home. Nutty tax laws, oh, we got 'em everywhere!

-- Posted by Kathy Fairchild on Thu, Aug 20, 2009, at 11:29 AM


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Kathy Fairchild received a Bachelor of Arts degree in business administration in 1986 from Marycrest College, Davenport, Iowa. She is also a 2003 graduate of the paralegal program at New York University. She moved to Marshall in 2006, following a career of more than 30 years with the world's largest farm equipment manufacturer. She is an Air Force brat and grandmother of four.
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