In what states do the residents pay the most taxes? Pay the least? Perhaps it depends on the variable used to measure the amount of taxes paid. In 2008 the Tax Policy Center reported the following statistics about the average annual 2006 taxes and percent of personal income paid per person by state.

a. Compare and contrast the variables €œtaxes per capita€ and €œpercent of personal income.€ How do you account for the differences in ranks for District of Columbia and Wyoming?
b. Based on this information, using the highest and lowest per-state amount of taxes paid per person, what was the €œaverage€ amount paid per person?
c. Based on this information, using the highest and lowest percent of income per state paid per person, what was the €œaverage€ percent paid per person?
d. Explain why your answers in parts b and c are the only average value you can determine from the given information. What is its name?

Transcribed Image Text:

Tax Revenue 2006 Percent of Taxes Per Capita Rank Income Rank DISTRICT OF COLUMBIA ALABAMA WYOMING SOUTH DAKOTA 7,764 $2,782 6,116 $2,842 4 48 51 16.6 48 51 Srce: Federation of Tax Administrators (20071 and U.S. Bureau of the Census and Bureau of Economic Anaylsis, http://taxpolicycenter.org