Ten Commandments of government

How does your state rank

What State Has the Lowest Tax Percentage to GDP

I was curious about what states collected the lowest taxes per state GDP (Gross Domestic Product). This was done to see what level that a Currency Use Tax (CUT Tax) would be needed to replace all of the state level taxes.

This snapshot does not included local taxes, federal funds, or property taxes. Only Indiana collects a property tax at a state level, and I removed this tax from computation from Indiana to track with other states. The only tax revenues I include come from state level taxes collected. These taxes include personal Income, Corporate, Sales, Gambling, and other revenues from user fees and licensing. That led to the discovery, that Alaska that does not have Income, or sales taxes. It is an anomaly that I will expand on later.

This data does not include federal funds that were sent to the states, this could include fuel taxes. I plan on adding this data later, and include state spending in the mix.

The method is simple, I collected state budgetary data from a data clearing house called Ballotpedia.org (http://ballotpedia.org/Main_Page) to find individual state revenues. Then I gathered the State GDP data from FRED (Federal Reserve Economic Data), a data collection cite from the Federal Reserve Bank of St. Louis (https://research.stlouisfed.org/fred2/graph/?utm_source=research&utm_medium=website&utm_campaign=data-tools). Then I would divide the GDP into the total revenues to achieve a percentage rate. This is the method I used to calculate the federal rate of 3.77 based on 2012 data. All of this data in this table is collected on 2013 data.

This is the initial table I have generated from lowest to highest percentage. Numbers in Millions. To view as Goggle spreadsheet. https://docs.google.com/spreadsheets/d/1m1xAbhtdlrAgXMtw-tmeqtzzMIWN7QL3BlsK6j8tYKs/edit?usp=sharing

	State	GDP	Tax revenue	percentage
1	MI	432,573	9,189	2.12%
2	WY	45,432	1,048	2.31%
3	NV	132,024	3,087	2.34%
4	CO	294,443	8,592	2.92%
5	SD	46,732	1,364	2.92%
6	MO	276,345	8,083	2.92%
7	AZ	279,024	8,583	3.08%
8	OK	182,086	5,604	3.08%
9	TX	1,532,623	47,281	3.08%
10	FL	800,492	25,021	3.13%
11	LA	253,576	8,103	3.20%
12	OR	219,590	7,296	3.32%
13	SC	183,561	6,251	3.41%
14	NH	64,118	2,283	3.56%
15	UT	141,240	5,093	3.61%
16	VA	452,585	16,421	3.63%
17	NE	109,614	4,052	3.70%
18	WA	408,049	15,772	3.87%
19	GA	454,532	17,980	3.96%
20	TN	287,633	11,403	3.96%
21	IA	165,767	6,637	4.00%
22	AL	180,727	7,314	4.05%
23	NC	471,365	20,559	4.36%
24	VT	29,509	1,289	4.37%
25	MD	342,382	14,958	4.37%
26	KS	144,062	6,341	4.40%
27	PA	644,915	28,822	4.47%
28	ID	62,247	2,799	4.50%
29	MS	105,163	4,738	4.51%
30	ND	56,329	2,547	4.52%
31	IN*	317,102	14,462	4.56%
32	MT	44,040	2,078	4.72%
33	CA	2,050,693	98,195	4.79%
34	NY	1,226,619	60,191	4.91%
35	WI	282,486	14,086	4.99%
36	AR	124,218	6,214	5.00%
37	IL	720,692	36,290	5.04%
38	KY	183,373	9,348	5.10%
39	OH	565,272	29,559	5.23%
40	ME	54,755	3,051	5.57%
41	MN	312,081	17,456	5.59%
42	DE	62,703	3,730	5.95%
43	WV	68,541	4,150	6.05%
44	NJ	509,067	30,922	6.07%
45	MA	446,323	27,169	6.09%
46	NM	92,245	5,655	6.13%
47	RI	53,184	3,324	6.25%
48	CT	249,251	19,366	7.77%
49	HI	75,235	6,234	8.29%
50	AK	59,355	7,476	12.60%

All number are in millions of dollars.

The results did surprise me with the lowest being Michigan and the highest being Alaska.

Now back to the Alaska anomaly. Most of their revenue is derived from drilling and mining royalties, so that the average citizen does not pay any taxes, but get an annual dividend, which makes them the lowest percentage based on the individual taxes. It would be negative for the average citizen. However, it shows a large degree of efficiency. They are able to capture a large percentage of their total GDP without taxation. A feat I am sure many governors would want to achieve. Although they need a lot of state owned property with valuable commodities. Therefore, I will leave Alaska as a one off anomaly, barring any political change in the future for the lower 48 states.

Then I was surprised by Michigan being the lowest state based on this criteria. However, I have not expanded this data, and have assumed that all states are operating on a balanced budget basis, for this initial data set, I will include bonds and deficits in the future.