SECTION TWO: INCOME TAX

One state in our comparison group has no income tax of any type: Washington. New Hampshire imposes a tax on interest and dividends, and Florida imposes a tax on intangible personal property, e.g., stocks and bonds. [ See Volume II, Appendix for a description of state income taxes] In the tables that follow, the tax liability attributed to each of these states is the sum of (1) the state income tax, if any, (2) th e additional federal income tax paid because of the absence of a state income tax deduction, and (3) the inclusion of property tax rebates where they occur separate from the income tax, as is the case in Vermont. The property tax rebate is included for Vermont in the interest of making a fair comparison between states. Several other states in our study include rental and property tax rebates, either as credits against income or payments against tax liability. Even in Vermont, taxpayers over age 62 includ e the rental or property tax rebate as a payment on their returns. To omit applicable rebates from returns for taxpayers under age 62 seemed to be more "apples to oranges" than our study intended.

Summary of Vermont Income Tax Ranking

	Under Age 65				Over Age 65
Income Range	Single	Married Joint	Married Separate	Head of Household	Single	Married Joint
0 - 15,000	11			11	6	2
15,000 - 30,000	7	11		11	7
30,000 - 50,000	9	12	9			7
50,000 - 100,000	9	9				9
100,000 +	9	8				10

1=Highest Tax; 12=Lowest Tax

Specific observations by income group follow:

• Person under age 65 receiving public assistance: Only Minnesota is more generous than Vermont. Vermont offers a $462 refund; Minnesota provides a $672 refund. Indeed, the only other state to offer a refund is New York ($75). All other states provide no refund whatsoever.

• $0 - $15,000 under age 65 group: Minnesota provides a larger refund than Vermont; New York provides the third highest refund. Three states tax this group: Maine, North Carolina, and Oregon. The elderly in the same income group receive generous tax treatment in Minnesota, and New York.

• $15,000 - $30,000 group: Minnesota imposes less tax than Vermont, while Massachusetts, North Carolina, Oregon, and Wisconsin tax this group more heavily (except for Head of Household). Within a given state, the tax burden is generally lower on the elderly than it is for filers under age 65.

• $30,000 - $50,000 and the $50,000 - $100,000 group: Washington, Florida, and New Hampshire impose a lower tax burden than Vermont, while all other states in the comparison group levy a higher tax.

• $100,000 - $190,000 group: Only New Hampshire, and Washington have a lower tax burden than Vermont; all other states impose a higher tax.

• $190,000 - $420,000 group: Connecticut, New Hampshire, Florida, and Washington have a lower tax burden than Vermont. The same is true for the over $420,000 group. The remaining seven states in the comparison group impose a higher tax burden.

• Head of Household, public assistance, and low-income filers generally receive favorable tax treatment in Vermont; only Minnesota offers a lower tax burden.

• The following tables show Vermont’s rank among the comparison states by income group. States are listed alphabetically. One (1) represents the highest tax, 12 represents the lowest tax.

Income Tax - Income Group: $0 - $15,000

Profile	HOH<65		MFJ>65		Single<65		Single>65		HOH<65
	Case #13		Case #19		Case #1		Case #16		Case #24
AGI ($)	10,360		10,360		7,740		7,740		0
	Tax ($)		Tax ($)		Tax ($)		Tax ($)		Tax ($)
State
Connecticut	0	1	0	2	0	5	0	7	0	1
Florida	0	1	36	1	0	5	38	3	0	1
Maine	0	1	0	2	35	3	16	5	0	1
Massachusetts	0	1	0	2	0	5	0	7	0	1
Minnesota	(1,687)	12	(167)	12	(454)	12	(146)	11	(672)	12
New Hampshire	0	1	0	2	0	5	0	7	0	1
New York	(264)	10	(82)	11	(67)	10	(168)	12	(75)	10
North Carolina	0	1	0	2	149	2	104	2	0	1
Oregon	0	1	0	2	260	1	166	1	0	1
Vermont	(1,071)	11	0	2	(395)	11	15	6	(462)	11
Washington	0	1	0	2	0	5	0	7	0	1
Wisconsin	(69)	9	0	2	27	4	27	4	0	1

Income Tax - Income Group: $15,000 - $30,000

Profile	HOH<65		MFJ<65		Single<65		Single>65
	Case #25		Case #7		Case #2		Case #17
AGI ($)	18,000		19,224		19,104		28,065
	Tax ($)		Tax ($)		Tax ($)		Tax ($)
State
Connecticut	0	2	0	7	208	9	46	10
Florida	0	2	0	7	0	10	56	9
Maine	0	2	128	6	609	6	283	7
Massachusetts	174	1	555	2	775	3	660	2
Minnesota	(2,036)	12	(196)	12	356	8	325	5
New Hampshire	0	2	0	7	0	10	0	11
New York	(216)	9	165	5	616	5	271	8
North Carolina	0	2	449	3	844	2	566	3
Oregon	0	2	796	1	1,115	1	737	1
Vermont	(536)	11	(51)	11	430	7	303	6
Washington	0	2	0	7	0	10	0	11
Wisconsin	(401)	10	421	4	754	4	464	4

Income Tax - Income Group: $30,000 - $50,000

Profile	MFJ<65		MFJ>65		MFS<65		Single<65
	Case #8		Case #21		Case #11		Case #3
AGI ($)	36,190		36,172		36,156		36,190
	Tax ($)		Tax ($)		Tax ($)		Tax ($)
State
Connecticut	356	8	356	9	1,425	8	1,465	8
Florida	157	9	70	10	294	10	0	10
Maine	505	6	832	8	1,544	7	2,007	4
Massachusetts	1,376	1	1,512	3	1,837	2	1,837	7
Minnesota	561	5	1,395	4	1,720	5	2,068	2
New Hampshire	157	9	0	11	294	10	0	10
New York	1,020	4	1,133	6	1,747	4	1,956	6
North Carolina	461	7	1,347	5	1,614	6	2,037	3
Oregon	1,297	2	1,708	2	2,006	1	2,555	1
Vermont	(344)	12	867	7	996	9	1,233	9
Washington	157	9	0	11	294	10	0	10
Wisconsin	1,110	3	1,756	1	1,817	3	2,002	5

Income Tax - Income Group: $50,000 - $100,000

Profile	MFJ<65		Single<65		MFJ>65
	Case #9		Case #4		Case #22
AGI ($)	53,445		53,445		84,627
	Tax ($)		Tax ($)		Tax ($)
State
Connecticut	1,436	8	2,404	8	3,427	8
Florida	128	10	730	10	827	10
Maine	1,479	6	2,955	5	3,994	5
Massachusetts	2,584	1	3,245	2	3,988	6
Minnesota	2,083	5	2,734	7	5,110	1
New Hampshire	128	10	714	11	714	11
New York	2,200	4	3,007	3	4,243	4
North Carolina	1,478	7	2,755	6	3,973	7
Oregon	2,461	3	3,365	1	4,974	2
Vermont	918	9	1,928	9	3,424	9
Washington	128	10	714	11	714	11
Wisconsin	2,480	2	2,961	4	4,712	3

Income Tax - Income Group: $100,000 +

Profile	MFJ>65		Single<65		MFJ<65		MFJ<65
	Case #23		Case #5		Case #26		Case #27
AGI ($)	108,284		108,284		191,953		421,506
	Tax ($)		Tax ($)		Tax ($)		Tax ($)
State
Connecticut	4,873	5	4,873	8	8,638	9	18,968	9
Florida	3,610	9	2,858	10	2,851	11	12,735	11
Maine	4,468	7	6,282	5	13,166	4	30,828	3
Massachusetts	5,935	2	6,764	2	12,755	5	28,334	6
Minnesota	5,748	3	6,406	3	13,408	2	31,868	2
New Hampshire	2,750	11	2,842	11	3,932	10	17,945	10
New York	4,725	6	6,108	6	13,195	3	29,889	4
North Carolina	4,398	8	5,666	7	12,155	7	28,649	5
Oregon	5,476	4	6,889	1	14,796	1	33,775	1
Vermont	3,550	10	4,337	9	10,482	8	26,315	8
Washington	2,450	12	2,712	12	1,485	12	7,965	12
Wisconsin	6,177	1	6,287	4	12,185	6	27,065	7