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State tax rankings

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Each year the non-profit organization the Tax Foundation calculates rankings for state and local taxes paid in each state. The latest rankings are out for 2010. What do they show? N.C. State University economist Mike Walden responds.

“Well, first of all, if you’re looking at all the states, you would want to avoid unfortunately … New York. They have the highest combined state and local tax rate in the country. On the other hand, if you’re looking for the cheapest state terms in taxes you want to go to Alaska. They have the lowest ranking in terms of combined state and local taxes. And I would say that it is important to take state and local taxes combined, because states divvy their responsibilities differently between state government and local government.

“Now, North Carolina, in 2010 — the latest year we have data for — North Carolina ranked 17th in terms of the state and local taxes paid as a percent of state income, which is how the Tax Foundation ranks these things. So, we were 17th. Actually, we were notch below 2009, where we were 16th. But we’re a couple of notches higher than in 2008, when we were 14th.

“Now if you look over a longer period of time, North Carolina has moved up the tax ladder. In 1977 we were 28th in terms of combined state and local taxes as a percent of income.

“Now different people are going to look at that change differently. Some would argue well that shows us that North Carolina’s become a high-tax state, and we need to do something about that. Others would say, ‘No. It tells us that, yes, North Carolina has been taking more tax revenues, but they needed to to spend it on things like higher education (and) highways.’ So there will be a debate about that, but the numbers do show over the long run, we have moved up the tax ladder.”


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