Connecticut No Longer First in Personal Income Per Capita

New data from the federal Bureau of Economic Analysis (BEA) reveals that Connecticut is no longer first place among states in terms of per-capita personal income. 

The Constitution State’s per-capita individual income exceeded every other states’ since 1987. Last year, however, Massachusetts outranked Connecticut regarding individuals’ mean income. The latter state’s residents averaged a yearly income of $82,475 each, whereas the former’s average earner got $82,082 annually. (The national average was $63,444.)

Moreover, Connecticut’s per-capita personal income growth has trailed every other states’ progress since 2009, amounting to just 37.5 percent during that time. Massachusetts ranked 16th in terms of per-capita income gains in that period. 

Such revelations have prompted critics of Connecticut’s onerous taxes and massive spending to observe that the state has pursued a different revenue policy from that of its northern neighbor in recent years. The pro-free-market Yankee Institute issued a policy brief Wednesday noting that Massachusetts undertook significant property-tax reforms four decades ago, limiting the extent to which real-estate taxes could increase. The Bay State also taxes income at a flat rate which was cut from 5.85 percent to 5 percent over the last two decades. 

Connecticut, by contrast, allows real-estate levies to rise as high and as quickly as localities wish to raise them, implemented a graduated income tax 30 years ago, and hiked it several times during the 2000s and the 2010s. The state’s highest income-tax rate is now 6.99 percent. 

According to the nonprofit Tax Foundation, Nutmeggers pay almost 13 percent of their earnings to the state, counties, and municipalities. The state’s combined state and local tax burden surpasses every other state except for New York, which has a 14.1-percent cumulative state and local tax burden. 

While Massachusetts’s tax burden is by no means light, Bay Staters pay slightly less of their income to state and local governments, rendering their combined tax take the 37th highest in the nation. 

“To be sure, tax policy isn’t the end-all-be-all of an area’s economic health,” wrote YI research director Ken Girardin. “But given that Massachusetts and Connecticut are neighboring New England states with similar industrial histories and demographic profiles, there are fewer variables that can explain why recent outcomes have differed so much.

Put another way: no one can blame the cold winters this time.”

The BEA statistics also revealed that the District of Columbia surpasses all states in terms of per-capita personal income, boasting a figure of $96,873. This largely owes to the national capital’s wealth of high-paying jobs in policy, law and related fields. 

Behind Massachusetts and Connecticut, America’s highest-ranking states when it came to per-capita individual income in 2021 were New York ($76,415), California ($76,386) and New Jersey ($74,805). The lowest-ranking states in that category were Mississippi ($45,438), West Virginia ($47,817), Kentucky ($50,699), Arkansas ($51,148) and Idaho ($51,379).

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Bradley Vasoli is managing editor of The Connecticut Star. Follow Brad on Twitter at @BVasoli. Email tips to [email protected].

 

 

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