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How Much of your State's Debt Rests on your Shoulders

Uncle Sam is not the only one who can raise taxes and borrow money on your behalf. Those powers also belong to each and every state in the Union – and they all exercise them. Which means that as Americans you not only shoulder the weight of the federal debt (your share: about $42,500), but also carry the burden of your state's IOUs. That burden varies per state of course, and the spread is very wide indeed, as shown by this graph, based on data released last month by the Tax Foundation.

States are shown bigger and closer to the center if their debt is higher. Red states are above the national average ($3,566), more so the darker red they are. Blue states are below the average, darker blue indicating the states with lighter burdens. Tennesseans carry the lightest burden. Their per-capita share in state debt is $924, making Tennessee the only state with less than a thousand dollars in state debt per head.

At the other side of the spectrum: Massachusetts. Each and every citizen owes the commonwealth the grand total of $10,989 – almost twelve times as much as in Tennessee. To be fair, it must be something in the water. Moving across the state line won't lower your per-capita state debt by much. Connecticut and Rhode Island, just south of Massachusetts, are #2 and #3 on the list, with debts of $9,244 and $8,899 respectively. The Bay State's other neighbors are all in the Top 10 as well: New York at #6 ($6,909), New Hampshire at #7 ($6,099) and Vermont at #10 ($5,251). And nearby New Jersey is #5 ($7,394) and Delaware is #9 ($5721). Completing what otherwise would have been a strictly northeastern Top 10 are faraway Alaska, at #4 ($8,207); and Hawaii, at #8 ($5,933).

For lower state debts, head to sunnier climes. Apart from Tennessee, six of the Bottom 10 states with the lowest per-capita state debt are in the South: Georgia (#47), Arkansas (#46), Texas (#45), North Carolina (#43), Florida (#42) and Alabama (#41). The three others are out west: Nebraska (#49), Nevada (#48) and Wyoming (#44).

In this part of the country, moving across the state line can make a big difference for the level of state debt. Want to set down roots on the shores of lovely Lake Tahoe? In South Lake Tahoe, on the Californian side, your per-capita share of state debt is $4,042. Across the state line, in the appropriately-named town of Stateline, Nevada, that amount is just $1,240. And you can smoke in the casinos.

Does the indebtedness of your state have direct consequences for your money or well-being? States with high levels of debt are more likely to cut back on the infrastructure and services they provide to their citizens, and/or reduce the money owed by raising state taxes. On the other hand, low levels of state debt may indicate an unwillingness to borrow and invest in infrastructure and services in the first place. As long as it remains legal to cross state lines, Americans will continue to vote with their feet – as they do on the shores of Lake Tahoe.

Sources: Table 1.1

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