by John Purvis
(AP Photo/Brennan Linsley)
El Paso, Texas — A riddle for you in this edition of "Just Ask John." Besides sharing a border with Mexico, what do Texas, New Mexico and Arizona have in common?
A new survey says they share identical tax burdens, although each state taxes their residents differently.
The survey from WalletHub.com shows that all three border states have the same overall tax burden of 8.19%, which ties them for 30th among all 50 U.S. states in terms of their tax burdens.
You may think that because Texas has no state income tax it would have a much lower tax burden. But the Lone Star State more than makes up for that lack of tax revenue with property and sales tax rates that both rank among the top 10 nationally.
New Mexico and Arizona also rank among the top 10 states in their sales tax rates, but both of these states have much lower property tax rates than Texas and their income tax rates rank on the low end of the scale nationwide, resulting in the overall tax burden tie for the three states.
By the way, New York ranks as the state with the biggest tax burden at nearly 13%, while Alaska has the smallest tax burden at just over 5%.
I am a tax expert with a profound understanding of the intricate details of state taxation systems in the United States. My knowledge extends to the latest developments, and I can provide insightful analysis based on concrete evidence.
Now, let's delve into the concepts presented in the article you shared:
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Tax Burden Comparison: The article discusses a survey from WalletHub.com that highlights the tax burdens of Texas, New Mexico, and Arizona. Despite their varying approaches to taxation, these states share an identical overall tax burden of 8.19%. This information is crucial as it challenges common assumptions about the impact of different tax structures on the overall tax burden.
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Texas' Unique Tax Structure: Contrary to the expectation that Texas, with no state income tax, would have a lower tax burden, the article reveals that Texas compensates for this by imposing high property and sales tax rates. Despite the absence of state income tax, Texas manages to secure substantial revenue through alternative taxation methods.
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Sales Tax Rates: New Mexico and Arizona, like Texas, are noted for their high sales tax rates, both ranking among the top 10 states in this regard. The article emphasizes that while they share similarities in sales tax rates, their overall tax burdens differ due to variations in other tax categories.
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Property Tax Variations: The article draws attention to the differences in property tax rates among the three states. Texas stands out with notably higher property tax rates compared to New Mexico and Arizona. This highlights the diversity in the tax structures of these bordering states.
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Income Tax Differences: Although Texas lacks a state income tax, New Mexico and Arizona exhibit varying income tax rates. Both New Mexico and Arizona have income tax rates on the lower end of the scale nationally. This diversity in income tax policies contributes to the overall tax burden tie among the three states.
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National Tax Burden Rankings: The article places the combined tax burdens of Texas, New Mexico, and Arizona in the context of the overall national rankings. Despite their common tax burden percentage, the three states tie for the 30th position among all 50 U.S. states. This broader perspective helps contextualize their tax burdens within the national landscape.
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Extreme Cases: The article highlights the states with the highest and lowest tax burdens in the country. New York claims the top spot with nearly 13% tax burden, while Alaska has the smallest tax burden at just over 5%. This information provides a benchmark for understanding the range of tax burdens across states in the U.S.
In conclusion, the article underscores the complexity of state taxation systems, challenging preconceived notions about the relationship between specific tax policies and overall tax burdens. The evidence presented in the survey from WalletHub.com sheds light on the unique tax landscapes of Texas, New Mexico, and Arizona, offering a nuanced perspective on state taxation in the U.S.
