New Jerseyans in the top 1 percent in annual income -- earning an average of $1.8 million a year -- pay 7 percent of their income in state and local taxes.
That compares with 11.2 percent for those in the bottom 20 percent, making an average of $12,500. With one exception, the lower your income the higher your tax burden, according to a new report by the Institute on Taxation and Economic Policy and New Jersey Policy Perspective.
The report looked at the entire local tax burden -- sales, excise, property, and income taxes -- as a percentage of income. It also took account of the federal income tax deduction. It found that if you divided the state’s income brackets into five segments, the lowest three paid a higher percentage of their income in local and state taxes -- 11.2 percent, 10 percent, and 9.1 percent respectively.
The next bracket, with an average income of $89,000, paid 8.7 percent locally. When it came to the top 20 percent, however, the report broke it down into three different segments. Those with an average wage of $156,000 paid 7.9 percent; the next -- with a range of income between $241,000 to $679,000 and an average of $355,600 -- paid 8.8 percent in local and state taxes. The top 1 percent dropped significantly -- most likely because the income range was so wide at the top -- and paid only 7 percent.