The Tax Foundation measures tax burden by its own formula.
Although the U.S. Census Bureau and the Federation of Tax Administrators both compare taxation rates in states, the foundation's rankings are slightly different.
Unlike the Census Bureau, it measures the actual tax collections and not just the state rates. That allows it to account for the differing levels of local property and sales taxes:
For example, New York's state sales tax rate is 4 percent, and its counties have local sales tax rates that range from 3 percent to 5.75 percent. Connecticut, on the other had, has a 6 percent state-level sales tax with no local add-ons. In a ranking that includes only state-level taxes, New York appears less taxed than it actually is, and Connecticut appears more taxed.
The Tax Foundation also calculates how much in taxes were paid in other states, such as a candy bar you bought at a 7-Eleven across the border.
The total local and state tax burden is the total taxes collected divided by the total income.
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