A Damaging Error

From 1997 to 2006, the Tax Foundation reported that Maine had the highest tax burden in the nation. (Tax burden is defined as the taxes paid in a state divided by the total income reported in a state.)

They didn't recognize that a significant amount of real estate taxes were paid by out-ot-staters owning generally expensive homes here. Those taxes showed up as paid in Maine, but the income of the home owners was reported in the states where they paid their income taxes. Thus, Maine showed the taxes, but other states showed the income, resulting in what appeared to be a crushing 'burden' for Maine taxpayers.
This misapprehension about Maine taxes was constantly cited by those opposed to what government does and led to a universal assumption that something drastic had to be done to control state spending. A series of public initiatives (Palesky, TABOR I and TABOR II) proposed draconian methods to cut spending and taxes. Maine's exaggerated tax burden became what Harry Truman used to call "A Big Lie": a falsehood repeated so often that people came to assume it was true.
Finally, the Tax Foundation came to its senses and started counting only the taxes paid by Mainers in the numerator, when they had only Maine income in the denominator. Their latest listing is the bottom chart on the left.

How come you haven't heard about this before?

 

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