And the winner is… Bridgeport, Connecticut! Surprised?
The infographic below ranks America’s highest taxed local municipalities (in this study, only the biggest city in each state was tested) for a family of three with an annual income of $50,000. It’s no shocker that cities like LA and Boston top the list, but others like Louisville and Bridgeport probably weren’t your first guess.
The rankings are based on the following local taxes, as calculated in the District of Columbia’s annual comparison report of local taxes. They are defined as:
- Individual Income Tax: 41 states collect income taxes. Some have a flat rate, although most permit cities and counties to levy their own taxes on top of the base rate. Methods for imposing income taxes vary greatly: “ states in 2011 allowed taxpayers to begin their state income tax computations with federal adjusted gross income (A.G.I.) or federal taxable income. Other states do not use either of these two measures of federal income as a starting point. Itemized deductions were assumed based on statistical averages cited in the study.
- Property Tax: “Real property tax burdens in the 51 cities are a function of residential real estate values, the ratio of assessed value to market value and the tax rate. Some jurisdictions allow certain deductions from the value of residential property before the tax is calculated while others allow credits against the calculated real estate tax. These deductions and/or credits are normally limited to owner-occupied properties.”
- Sales Tax: “The sales tax burdens included in this study are based on information from the 2011 Bureau of Labor Statistics Consumer Expenditure Survey (CES). The CES provides data on consumer expenditures for different income categories. For example, the CES data provide average annual expenditures on items such as food at home, food away from home, apparel and services, health care and transportation. The expenditure data and the tax rates of cities are used to determine the sales tax that these expenditures generate.”
- Automobile Tax: “Automobile taxes included in this study are gasoline taxes, motor vehicle registration fees (state and local), excise taxes, and personal property taxes levied on automobiles.” The size, usage and type of automobile were assumed based on averages for a family of three making $50,000/year.
Before checking out the highest taxed cities, note the lowest:
The lowest combined tax burdens for the 51 cities occur in Cheyenne, Wyoming;
followed by Anchorage, Alaska; Jacksonville, Florida; and Memphis, Tennessee.
JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.