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When it comes to taxes, it could be a lot worse

Editorial

Posted: Friday, April 14, 2006

With the deadline for federal income tax returns looming (it’s Monday, by the way), now is as good a time as any for a tax reality check — and a reminder how good Alaskans have it when it comes to taxes.

According to the Tax Foundation, a nonprofit, nonpartisan research and public education organization, Americans will celebrate Tax Freedom Day on April 26. In other words, most folks have to work from Jan. 1 to April 26, 116 days, before earning enough to pay their taxes, all their taxes.

Not Alaskans. They’ve already seen their Tax Freedom Day. It was Wednesday. The only state to enjoy an earlier Tax Freedom Date was Alabama, which marked its Tax Freedom Day on Tuesday.

In contrast, the state with the heaviest tax burden — Connecticut — won’t see Tax Freedom Day for another month.

The Tax Foundation notes the states with the lightest tax burdens have a large number of low-income taxpayers who pay most of their federal income taxes at the lower rates, 10 and 15 percent.

But it notes: “Alaska stands out as an exception: Income and federal tax payments are above average there, but state-local taxes are extraordinarily low.”

The Tax Foundation reports the nation’s average state-local tax burden will be 10.6 percent of residents’ income, with the highest being Maine’s 13.5 percent and the lowest being Alaska’s 6.6 percent. In Alaska, the tax burden per capita is $2,598; in Connecticut, it’s $6,018.

It’s interesting to note how many days Americans work to pay for taxes compared to other spending categories: 77 days, federal taxes; 39 days, state and local taxes; 62 days, housing and household operation; 52 days, medical care; 30 days, food; 30 days, transportation; 22 days, recreation; 14 days, clothing and accessories; and 39 days, other categories.

Said another way, Americans spend two hours and 32 minutes of an eight-hour workday to pay their taxes; it takes only two hours and 20 minutes to provide for food, clothing and housing.

If high taxes are on your list of things to avoid, then these are the states (and their Tax Freedom Days) to avoid: Connecticut, May 12; New York, May 9; New Jersey, May 6; Washington, May 4; Minnesota, May 3; Massachusetts, May 2; Maine, May 1; Rhode Island, May 1; California, April 30; and Illinois, April 30.

On the other hand, if low taxes make a place more livable in your eyes, here are the states that celebrate Tax Freedom Day the earliest, right behind Alabama and Alaska: Mississippi, April 13; Oklahoma, April 14; Tennessee, April 14; New Mexico, April 15; South Dakota, April 16; Montana, April 16; Idaho, April 16; and West Virginia, April 17.

Low as those tax burdens may be, our money is on Alaska as the best place to live — in terms of taxes, quality of life, opportunities, unspoiled beauty, great fishing and abundant wildlife. Not to mention, Alaskans still get a permanent fund dividend check each year for the privilege to live here.

We may grumble as we put our tax returns in the mail to Uncle Sam and, in general, say no to more taxes, but it’s worth remembering it could be worse, a lot worse. Tax time is a good time to count our blessings.



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