- Truth In Accounting is a Chicago based non-profit that developed a measurement/set of numbers that calculated the amount of money each taxpayer in their state would have to pay to eliminate the financial debt hole the state government has gotten itself into.
- Taxpayer burden was estimated by determining each taxpayer’s share of state debt after setting aside capital-related debt and assets, leaving primarily unpaid pension and retirement health promises.
- Their report identified the so-called “Sinkhole States,” these are states that will put the highest debt burden on their states' residents.
- The states with the worst debt numbers according to their analysis are Connecticut, Illinois, New Jersey, Massachusetts and Hawaii with Connecticut being the worst and Hawaii being the fifth worst.
- The analysis also identified the best states, the so-called Sunshine states from a debt load perspective.
- These best states start with Alaska being the most debt burden free or who have no debt followed by North Dakota, Wyoming, Utah and South Dakota.
- In other words, Sinkhole States have substantial unfunded pension liabilities to be paid by future taxpayers while Sunshine states, states with taxpayer surplus or littke debt, fund pension costs and other state costs during the year employees earn the benefits, and the money is set aside for that year.
- Connecticut has an overall budget shortfall of $61.4 billion, which breaks down to $48,100 per taxpayer.
- Thus, the state debt level debt burden for Connecticut residents is almost equivalent to the amount of money those residents would owe the Federal government to pay off the Federal debt.,
- Truth in Accounting concluded from their analysis that most of Connecticut’s state employee retirement benefits have been promised but not funded.
- At the other end of the spectrum, Alaska was found to be in the best financial shape with a budget surplus of $13.5 billion, or $46,900 per taxpayer. Thus, Alaska has enough money to pay state employees’ retirement benefits and other outstanding bills with currently saved funds, placing no debt burden on future residents.
- The report concludes very simply that states like Alaska and other Sunshine states are in good financial shape because the legislators and governors have only promised citizens and employees what they can afford to deliver.
- Connecticut - 6.6%
- Illinois - 6.8%
- New Jersey - 6.5%
- Massachusetts - 5.6%
- Hawaii - 4.4%
- Alaska - 6.5%
- North Dakota - 2.8%
- Wyoming - 4.4%
- Utah - 3.6%
- South Dakota - 3.7%
- Connecticut - $91.41
- Illinois - $99.40
- New Jersey - $87.64
- Massachusetts - $93.28
- Hawaii - $85.32
- Alaska - $93.37
- North Dakota - $110.62
- Wyoming - $103.73
- Utah - $103.31
- South Dakota - $113.38
- State residents in all five Sinkhole states get less than the national value for their $100, with some of them getting far less than $100 worth.
- Four out of five states in the Sunshine states get more than the national value for their $100, with some of them getting far more value than the national average.
- Connecticut - 6.7%
- Illinois - 5.0%
- New Jersey - 8.97%
- Massachusetts - 5.2%
- Hawaii - 11.0%
- Alaska - 0.0%
- North Dakota - 3.22%
- Wyoming - 0.0%
- Utah - 5.0%
- South Dakota - 0.0%
- The top state income tax rates in Sunshine states are at or far below the top state income tax rates in Sinkhole states.
- Three of the top Sunshine states do not even have a state income tax.
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