State personal income: fourth quarter of 2006: annual estimates for 2006

Survey of Current Business, April, 2007 by David G. Lenze

By state, personal current taxes increased most rapidly in 2006 in Wyoming (21.0 percent) and increased least rapidly in Maine (6.9 percent). In general, the states with the highest personal income growth had the highest personal current taxes growth.

Per capita personal income

U.S. per capita income grew 5.2 percent in 2006, up from 4.2 percent in 2005.

Louisiana's per capita income rebounded 25.5 percent in 2006 after falling 9.0 percent in 2005. The extreme swing in Louisiana resulted from the effects of the uninsured fixed assets destroyed by and as a consequence of Hurricanes Katrina and Rita in 2005, a population loss of more than 200,000 residents, many of whom were low-income, and solid wage gains in 2006.

Connecticut led the Nation with per capita income of $49,852--37 percent above the national average. Typically, the list of top 10 states with the highest per capita incomes varies little from year to year. Wyoming, however, following a sustained 10-year climb from 33rd place, returned to the top 10 after a 23-year absence. Its ranking is strongly tied to the mining industry, which has long-term expansionary and contractionary cycles.

Mississippi had the lowest per capita income of all states, $26,535--27 percent below the national average. The bottom 10 states were all ranked in the bottom 10 last year.

RELATED ARTICLE: Alternative measures of household income

Three of the most widely used measures of household income are BEA's measure of personal income, the Census Bureau's measure of money income, and the Internal Revenue Service's measure of adjusted gross income of individuals. (1)

Personal income, in general, is a more comprehensive measure. Personal income is defined as the sum of wage and salary disbursements, supplements to wages and salaries, proprietors' income with inventory and capital consumption adjustments, rental income of persons with capital consumption adjustment, personal dividend income, personal interest income, and personal current transfer receipts, less contributions for government social insurance. Because the personal income of an area represents the income that is received by, or on behalf of, all the persons who live in that area, and because the estimates of some components of personal income (wage and salary disbursements, supplements to wages and salaries, proprietors' income, and contributions for government social insurance) are made on a place-of-work basis, state personal income includes an adjustment for residence. Personal income includes the incomes of individuals, of nonprofit institutions that primarily serve individuals, of private noninsured welfare funds, and of private trust funds. The property income earned on life insurance and annuity reserves of life insurance carriers and earned on the assets of noninsured pension plans are also included in personal income.

Money income consists of income in cash and its equivalents that is received by individuals. It excludes--but personal income includes--employer contributions for employee pension and insurance funds, lump-sum payments except those received as part of earnings, certain in-kind personal current transfer receipts, such as Medicaid, Medicare, and food stamps, and imputed income. (2) Money income includes--but personal income excludes--personal contributions for government social insurance, income from government employee retirement plans and from private pensions and annuities, and income from regular interpersonal transfers, such as child support.