Cities with Highest (and Lowest) Taxes

by Thomas C. Frohlich and Alexander E.M. Hess, 24/7 Wall St, February 14, 2014 (excerpt)

...according to a new report, what you owe in taxes could be largely determined by where you live.

The report, released by the Office of Revenue Analysis of the government of the District of Columbia, reviewed the estimated property, sales, auto and income taxes for a hypothetical family at various income levels in 2012 in the largest city within each state. City tax burdens vary widely. A family of three earning $75,000 in Cheyenne, Wyoming, paid just $3,475, or 4.6% of its income, in state and local taxes. In Bridgeport, Connecticut, a family of three earning $75,000 paid $16,333, or 21.8% of its income — a total that does not even include federal taxes.

Not surprisingly, tax rates influence overall tax burdens significantly. This is especially true for property taxes. Seven of the cities with the highest tax burdens also had among the 10-highest property tax rates, according to the Office of Revenue Analysis. Homeowners in Columbus, Ohio, which had the fifth-highest tax burden in the nation, paid an effective rate of $3.57 for every $100 in home value, the highest such rate in the U.S....

8. Honolulu, Hawaii

• Taxes for family earning $25,000: $4,232 (the highest)
• Taxes for family earning $150,000: $11,840 (9th lowest)
• Unemployment rate: 5.2%

Although Honolulu had the highest property values of any city reviewed, property tax burdens in the city were actually lower than in most comparable regions. Honolulu’s effective property tax rate was just 0.35%. Only Oklahoma City, Oklahoma, and Boise, Idaho, had lower effective rates. The city’s total sales tax rate was just 4.5%, lower than in most other places considered. Income tax burden was also relatively low in Honolulu. But while residents faced fairly low tax burdens, living in Hawaii is associated with a higher cost of living. As of 2011, Hawaii had the highest prices of any state in the U.S., according to the Bureau of Economic Analysis. Due to Hawaii’s location, the state relies on imported petroleum to generate much of its electricity, resulting in higher energy prices.

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