California still holds 4th place in state-local tax burdens

Californians carried the nation's fourth highest state and local tax burden in 2011, the Tax Foundation says in a new report, largely because its personal incomes are markedly lower than those of other high-tax states.

The Washington-based Tax Foundation annually calculates state and local tax burdens as a percentage of personal incomes and California has traditionally been in the top tier. But the data are always several years old and 2011 was the last year before a temporary, voter-approved increase in sales and personal income taxes went into effect. Therefore, the 2012 rankings a year from now could push California higher.

For 2011, the Tax Foundation calculated that California's tax burden was 11.4 percent of its average per capita income of $45,354, or $5,136. New York was the highest at 12.6 percent, followed by New Jersey at 12.3 percent and Connecticut at 11.9 percent. Wyoming residents had the lowest tax burden, 6.9 percent, and the national average was 9.8 percent.

One reason for California's high rank was that while its per capita tax burden was, indeed, relatively high, its per capita personal income was only slightly above the national average of $42,473, while other high-tax states also had markedly higher incomes.

Connecticut had the highest per capita income at $60,287 while California's was 15th highest. Texas, with which California is often compared, had the nation's fourth lowest tax burden of 7.5 percent of personal income which, at $41,269 per capita, was 23rd highest.

New York, New Jersey and Connecticut have occupied the top three places for a number of years. California was fourth in 2010 and fifth in 2009.

The state's 2011 tax burden of 11.4 percent was slightly lower than 2010's percentage but has been fairly consistent for decades, ranging from a high of 12 percent in 1977 to a low of 10.4 percent in 2005.

In 2012, voters approved a fractional increase in the state sales tax and a sharp boost income taxes on the state's highest-income families, raising about $6 billion more a year temporarily to balance the state's budget.

With Californians' personal income totaling about $1.7 trillion a year and state and local taxes approximating $200 billion, that would add perhaps a third of a percentage point to the overall burden. And it means California could challenge Connecticut for third place — especially if a spate of recent local sales tax increases continues.

PHOTO: Yolanda Odell of Sacramento dances to get the attention of last minute tax filers on the corner of Truxel Road and W. El Camino Ave. for Liberty Tax Service in 2011. The Sacramento Bee/Renee C. Byer