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10 states for high and low earners

Top 10 states for high and low earners

MoneyRates.com Senior Financial Analyst, CFA
March 27, 2015

Whether you think income inequality is inherently unfair or the rightful result of an economic system that rewards achievement, one thing is clear: Its existence means there are winners and losers in the game of capitalism. But who's winning and who's losing today?

To find out, MoneyRates.com took a look at incomes on a state-by-state basis. While median income is often used to measure a state's relative wealth, income inequality is a function of the extremes, not the median. So MoneyRates.com looked at income extremes -- which states have the highest proportions of taxpayers who earn $1 million or more annually and which have the highest proportions of taxpayers who earn less than $25,000 annually -- to find out which parts of the U.S. harbor the highest concentrations of the very rich and the very poor today.

States with the most high earners

Million-dollar earners represent just over one-quarter of 1 percent of taxpayers nationally, so these are people even most "1 percenters" could envy. But where are most of them located? Here is a list of states with the highest proportions of million-dollar earners.

1. Connecticut. The nation as a whole averages 27 people earning a million dollars a year or more for every 10,000 taxpayers, but in Connecticut there are 63 high earners for every 10,000 taxpayers, giving it the highest portion in that elite earning group nationally. This wealth seems to be good for the state's economy in general, because Connecticut also has the third smallest percentage of taxpayers making less than $25,000 per year.

2. District of Columbia. Money and politics seem to go hand-in-hand these days, so perhaps it is no surprise that the nation's capital places second on this list, with 55 out of every 10,000 taxpayers earning $1 million or more per year. The District also has the nation's smallest portion of taxpayers earning less than $25,000.

3. New York. It takes a lot of money to live in New York City, which is probably one reason the state ranks third on this list, with 47 out of every 10,000 taxpayers earning $1 million or more.

4. Massachusetts. Like its neighbor Connecticut, Massachusetts benefits both from a relatively high proportion of high earners (42 out of every 10,000 taxpayers) and one of the lowest percentages of people earning less than $25,000.

5. New Jersey. Rounding out a strong showing by the Northeast, New Jersey gives the region four of the top five spots on this list with 40 high earners for every 10,000 taxpayers.

6. North Dakota. An energy boom spurred North Dakota's economy in recent years, so it will be interesting to see if it continues to rank so highly for high earners now that oil prices have collapsed. But as of the latest reading, the state boasts 35 high earners per 10,000 taxpayers.

7. California. From Hollywood to Silicon Valley, wealth is part of California's image, and that it borne out by its placement on this list. Though it also technically has 35 high earners for every 10,000 taxpayers, just as North Dakota does, North Dakota edges California by a slim margin in the rankings.

8. Texas. Like North Dakota, this is another state that might lose some of its million-dollar incomes -- 32 for every 10,000 taxpayers -- to the plunge in oil prices.

9. Florida. Unfortunately, Florida could be the poster child for income inequality. While it ranks in the top 10 for proportion of high earners, with 31 for every 10,000 taxpayers, it also ranks second in the percentage of people earning less than $25,000.

10. Illinois. With 31 per 10,000 taxpayers, Illinois came in just a few thousandths of a percent behind Florida to round out the top 10 for high earners.

States with the most low earners

On the other end of the spectrum, here are the states with the most people coming out on the short end of income inequality -- those earning less than $25,000 a year:

1. Mississippi. Nationally, about 41 percent of taxpayers earn less than $25,000 a year, but in Mississippi the number is 48.5 percent.

2. Florida. In Florida, 46.5 percent of taxpayers earn less than $25,000 a year, making it the only state in the top 10 for its percentage of million-dollar earners to also make the top 10 for low earners.

3. New Mexico. Nos. 3 through 9 on this list are grouped very tightly in percentage terms. Low income earners represent 45 percent of New Mexico's taxpayers, placing it third on this list

4. Arkansas. Arkansas also came in at 45 percent, trailing New Mexico by a very narrow margin.

5. Georgia. Just behind its fellow southern state Arkansas, 44.7 percent of Georgia's taxpayers earn less than $25,000 per year.

6. Alabama. Georgia's immediate neighbors to the west and east are also very close on this list, with Alabama ranking just behind Georgia at 44.7 percent.

7. South Carolina. Again, this part of the list is very tightly packed, with South Carolina's percentage of people earning less than $25,000 a year coming in just behind Alabama's, at 44.6 percent.

8. Tennessee. In Tennessee, 44.4 percent of taxpayers earn less than $25,000 a year, placing it just slightly ahead of yet another Southeastern state.

9. Louisiana. Unfortunately, there is a concentration of poverty in the Southeast, with Louisiana making it eight states from the region on this list, with 44.4 percent of its taxpayers earning less than $25,000 per year.

10. Michigan. This is the only northern state on the list, but as much as Michigan has been associated with bankruptcies in recent years, that comes as no surprise. Here, 43.9 percent of taxpayers earn less than $25,000 annually.

Nationally, there are 150 people earning less than $25,000 a year for every one earning $1 million or more. In many cases, the wealthy have earned their position through hard work and ingenuity. Still, while being part of such a small minority of high earners may be nothing to be ashamed of, the higher the ratio of poor to rich gets, the more troubling those numbers may be for the nation.

If you didn't see your state on the lists above and you're curious where it placed in this study, you can find its rankings here.

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