Thanks to an oil boom, and some very good years in agriculture, North Dakota has shot to the top of the list when it comes to personal income levels. In terms of per-capita personal income, North ranked 7th in the nation in 2013 at $53,182.
But what happens if we take things like taxation and cost of living into account? After all, your income isn’t so much what you get paid but what you have left after you pay for taxes and the necessities.
The map above is from the Tax Foundation and shows the relative value of $100 in each state using the Bureau of Labor Statistics’ Regional Price Parities calculation. As you can see, North Dakota is doing pretty good. A $100 bill in our state goes further than it does in a lot of other states.
But what if we take into account taxes as well? American Enterprise Institute scholar Mark Perry has done just that, and ranked the states based on personal income, tax burdens, and purchasing power.
“Both North Dakota and Wyoming moved up five places in the rankings, from No. 7 and No. 8 before adjusting for taxes and cost-of-living to No. 2 and No. 3 after adjusting for both factors,” he writes. “Even though the personal taxes paid in North Dakota(12.71%) and Wyoming (12.87%) as a share of pre-tax, per-capita personal income are higher than the US average of 10.95% for 2013, the lower-than-average cost-of-living in those two states moved them up five places to rank as the country’s two highest-income states (not counting DC).”
North Dakota’s strong economy, coupled with a relatively low cost of living, is enough to make our state one of the richest in the nation in terms of personal income despite above-average tax burdens.
Now, just imagine where we’d be if our state was a little less aggressive with the taxing.