Tax Foundation: $100 buys a little more in R.I.

THE TAX FOUNDATION looked at what $100 will buy in each state -- in Rhode Island, it buys $101.94 worth of goods. / COURTESY TAX FOUNDATION
THE TAX FOUNDATION looked at what $100 will buy in each state -- in Rhode Island, it buys $101.94 worth of goods. / COURTESY TAX FOUNDATION

PROVIDENCE – One hundred dollars stretches farther in Rhode Island than in Washington, D.C., or Hawaii.
The Washington, D.C.-based Tax Foundation looked at the real value of $100 in each state and the District of Columbia based on price data published by the federal Bureau of Economic Analysis.
In Rhode Island, $100 allows one to buy $101.94 in goods, while in Washington, D.C., it only buys $84.96 in goods, and Hawaii, $86.06.
Among the New England states, $100 is only worth more in Rhode Island and Maine, where it will buy $102.35 worth of items. It’s worth the least in Connecticut – $92.17.
According to the foundation, states where $100 is worth the most are Mississippi ($115.21), Arkansas ($114.29), South Dakota ($114.16), Alabama ($114.03) and West Virginia ($113.12).
In addition to the District of Columbia and Hawaii, $100 is worth the least in New York ($86.73), New Jersey ($87.34) and California ($89.05.)
The foundation said that states with higher nominal incomes also have higher price levels.
“This is because there is a relationship between the two: in places with higher incomes, the prices of finite resources like land get bid up. But the causation also runs in the opposite direction. Places with high costs of living pay higher salaries for the same jobs. This is what labor economists call a compensating differential; the higher pay is offered in order to make up for the low purchasing power,” the foundation stated.
“Many policies – like minimum wage, public benefits, and tax brackets – are denominated in dollars. But with different price levels in each state, the amounts aren’t equivalent in purchasing power. This has some unexpected consequences; people in high-price-level states like New Jersey will often pay more in federal taxes without feeling particularly rich,” the foundation stated.

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